Piper Sandler's initial ratings on the three major commercial space stocks: Only "hold" AST SpaceMobile, SpaceX and Rocket Lab still face short-term headwinds.

On July 16, Piper Sandler initiated coverage of three highly anticipated aerospace companies with drastically different ratings: "hold" for AST SpaceMobile (ASTS.US) with a target price of $100; and "neutral" for Rocket Lab (RKLB.US) and SpaceX (SPCX.US) with target prices of $83 and $156, respectively. Piper Sandler's core assessment is that while reusable rocket technology is the most valuable long-term competitive advantage in the space economy, SpaceX and Rocket Lab may be the best-positioned companies over a multi-year timeframe. However, within the next 12 months, AST SpaceMobile offers a more acceptable valuation and a clearer EBITDA growth path. AST SpaceMobile: Optimal risk-return ratio, a "satellite broadband unicorn" focused on cooperation rather than competition Piper Sandler's five-star analyst Alexander Potter explicitly stated that AST SpaceMobile currently provides the best risk-return ratio among the three aerospace stocks, due to its attractive valuation and clear EBITDA growth path. AST SpaceMobile's core business model involves partnering with major mobile network operators such as AT&T, Verizon, Vodafone, and Rakuten rather than competing with them. Piper believes this strategy allows AST SpaceMobile to reach over 3 billion wireless users globally. Analysts predict that the company's revenue will grow from approximately $166 million in 2026 to over $5 billion in 2031, with EBITDA reaching around $4.2 billion during the same period. The $100 target price is based on a 20x EV/EBITDA multiple for 2031 and discounted to present value at 15%. However, Piper also highlighted significant risks facing AST, including competition from SpaceX's Starlink direct-to-phone service, large capital expenditures, uncertainty surrounding satellite deployment plans, regulatory approvals, and customer acceptance. On the same day Piper released their ratings, AST SpaceMobile announced plans to raise $1 billion through a private placement of convertible preferred notes, leading to concerns about equity dilution and a more than 17% drop in stock price. This marks the second time this year the company has raised $10 billion through convertible bonds (first in February). Funds raised will be used to acquire additional orbital slots and explore partnership or acquisition opportunities to reduce reliance on third-party launch providers. Since hitting a peak of over $130 at the end of May, ASTS has dropped significantly, but Piper's $100 target price suggests around 50% upside potential. According to data from 10 analysts surveyed by S&P Global, the consensus rating for the stock is "hold," with an average target price of $79.78. Rocket Lab: "Strongest alternative to SpaceX," but optimism priced in Piper gave Rocket Lab a "neutral" rating with a target price of $83, positioning it as the strongest alternative to SpaceX in the public launch service provider space. Piper emphasized the company's vertical integration business model and the outstanding performance of its Electron rocket program with around 90 successful launches. The company has completed full-cycle testing of the Archimedes vacuum engine. Rocket Lab's future growth largely depends on the successful development and deployment of the larger reusable Neutron rocket, with its maiden flight targeted for the fourth quarter of 2026. Additionally, Rocket Lab recently announced an $8 billion acquisition of Iridium Communications, further expanding its business footprint. Morgan Stanley analysts noted that this deal makes Rocket Lab "increasingly resembling a 'miniature SpaceX,'" raising their bullish scenario price target from $185 to $293. However, Piper expects Rocket Lab's stock price to remain closely tied to SpaceX over the next year, despite its potential to challenge SpaceX. Analysts pointed out that much of the optimism surrounding Rocket Lab is already priced in, with the company's enterprise value/revenue ratio even higher than SpaceX's. As of July 16, Rocket Lab's stock price was around $67.30, down approximately 55% from its 52-week high of $150.23 in May. SpaceX: Strong long-term narrative, constrained short-term upside potential Piper is confident in SpaceX's long-term prospects, believing the company has played a key role in creating the modern space services industry and may ultimately benefit from emerging opportunities such as orbital AI infrastructure. The $156 target price is also based on a 20x EV/EBITDA multiple for 2031 and discounted at 15%. However, analysts pointed out several factors that could limit the near-term upside potential of SpaceX's stock price: the expiration of staged lock-up periods releasing a large amount of tradable shares; uncertainty regarding a potential acquisition by Tesla, Inc.; and the substantial capital expenditures required for future growth plans, which Piper predicts could easily consume "hundreds of billions or even trillions of dollars annually." Analysts believe investors may need more evidence to value some of the company's more ambitious projects. Market data confirms Piper's cautious assessment. As of July 16, SpaceX's stock price has fallen below their IPO offering price of $135, with a cumulative decline of about 20% in July. Short positions have increased to around 29% of tradable shares. In addition, the Starship's 13th test flight scheduled for July 16 was automatically aborted during the ignition stage due to some engines failing to start, marking the first launch mission since SpaceX's IPO in June. CEO Elon Musk stated they hope to try again "within a few days." Industry Background: Value shift from "launch" to "infrastructure" in the aerospace sector Piper's rating choices reflect a deep evolution in the investment logic of the aerospace sector. Reusable rockets are becoming the most valuable competitive advantage in the space economy. Morgan Stanley points out that the largest scale of value creation in the aerospace economy does not solely come from launch services but from owning differentiated infrastructure. The three companies represent three different paths in the space economy: AST SpaceMobile focusing on the telecommunication-grade market of "direct-to-phone satellites"; SpaceX constructing a vertical empire from launch services to Starlink to orbital AI; and Rocket Lab transitioning from a launch service provider to a "space ecosystem" player. Piper's selection is clear: while SpaceX and Rocket Lab face high valuations reflecting long-term narratives, AST SpaceMobile offers the best short-term value proposition. However, the long-term competitive landscape of the space economy is far from settledas Rocket Lab CEO Peter Beck expressed, despite billions of dollars invested and over 100 companies trying, "actually only two companies" have achieved reliable, routine launch services. Piper Sandler's differentiated ratings make sense: AST SpaceMobile offers the best risk-return ratio in the short term due to its lower valuation and clearer profit path, earning a "hold" rating. Meanwhile, SpaceX and Rocket Lab have long-term competitive advantages in reusable rocket technology and vertical integration but face high valuations, significant capital expenditure needs, and unique uncertainties (lock-ups, acquisition rumors, Starship test flights), leading Piper to take a "neutral" stance. It's worth noting that there is a difference in Wall Street's overall view of these three stocks compared to Piperanalysts believe SpaceX has the greatest upside potential, with an average target price of $243.81 indicating around 80% potential upside.