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On Monday, Oppenheimer began coverage on AST Spacemobile (NASDAQ:ASTS), assigning the stock a Perform rating. The firm highlighted AST’s innovative approach to extending 5G mobile services to rural areas through the development of mobile cell-sites in space, utilizing low earth orbits (LEOs). With a current market capitalization of $6.23 billion and trailing twelve-month revenue of just $4.42 million, the company is betting big on a market projected to be substantial, with a total addressable market (TAM) estimated at $50 billion within a decade, where satellite operators could capture $15 billion as wholesale providers to mobile network operators (MNOs).
The company’s unique proposition aims to enable consumers in rural areas to access the same mobile services as those in urban environments. While AST Spacemobile is currently in a venture stage and largely pre-revenue, marking it as a highly risky investment, InvestingPro data shows the stock has delivered an impressive 978% return over the past year. Concerns were raised regarding the availability of information on several key aspects of the business, including spectrum access and management, the business model, competition, and supplier relationships with MNOs. InvestingPro subscribers have access to 12 additional key insights about ASTS’s financial health and growth prospects.
AST Spacemobile’s ambition is to bridge the connectivity gap between urban and rural regions, ensuring that mobile services are ubiquitous, regardless of location. Despite the potential market size and the innovative nature of AST’s business, the complexity and early stage of their operations contribute to the uncertainties surrounding the stock. The company maintains a strong liquidity position with a current ratio of 7.9, though InvestingPro analysis indicates the stock is currently trading above its Fair Value.
With the Perform rating, Oppenheimer indicates a neutral stance on AST Spacemobile’s shares, suggesting that the stock might perform in line with the broader market expectations. This rating reflects both the opportunities and challenges that lay ahead for AST as it endeavors to establish itself within the competitive space and telecommunications industry.
Investors are advised to consider the various risks highlighted by Oppenheimer, including the company’s pre-revenue status and the lack of detailed information on several critical business elements. As AST Spacemobile progresses, the market will closely monitor its ability to secure spectrum rights, refine its business model, and cultivate partnerships with MNOs.
In other recent news, AST SpaceMobile reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with a narrower-than-expected loss. The company achieved an earnings per share (EPS) of -$0.18, beating the forecast of -$0.21, and exceeded revenue expectations with $4.42 million against the anticipated $3.22 million. UBS has increased its price target for AST SpaceMobile shares to $38.00 from $31.00, maintaining a Buy rating, citing progress in satellite tests, carrier agreements, and production scaling. Roth/MKM also initiated coverage of AST SpaceMobile with a Buy rating and a $42.00 price target, highlighting the company’s innovative approach to connectivity. AST SpaceMobile has entered strategic agreements with Ligado Networks to access up to 45 MHz of spectrum in the U.S. and Canada, enhancing its satellite applications. The agreements include an upfront payment of $350 million and an annual payment of at least $80 million to Ligado Networks, pending bankruptcy court approval. The company has secured launch capacity for 60 satellites and plans to increase satellite production to six per month by the second half of 2025. These developments reflect AST SpaceMobile’s commitment to advancing its technology and service capabilities in the telecommunications sector.
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