Is 80% of SpaceX's (SPCX.US) upside hidden in Starship? Morgan Stanley: The 15th test flight will be a major catalyst.

Morgan Stanley says SpaceX's (SPCX.US) upcoming 15th Starship flight could mark an important step toward full reusability for its next-generation rocket, potentially expanding the company's opportunities in satellite communications and artificial intelligence (AI). In a research report published last Sunday, lead analyst Adam Jonas reiterated an "Overweight" rating on SpaceX and a $300 price target, implying roughly 84% upside from the stock's Monday close of $163.42. Jonas said the next two Starship missions could reshape investors' expectations for the company's growth prospects. It is understood that the 15th test flight is tentatively scheduled for local time Nov. 8 and may include an attempt to catch the returning Starship vehicle using the launch tower's mechanical arms. SpaceX CEO Elon Musk recently said the company wants to attempt this operation, but it has not yet been confirmed. According to preliminary air traffic control notice information cited by Morgan Stanley, the 16th test flight could take place as early as Dec. 10. Neither date has been confirmed by SpaceX. For investors, the significance goes beyond the technical achievement of recovering the vehicle. If reusable technology is realized, launch costs will fall sharply, while the payload SpaceX can send into orbit in a single launch will also increase significantly, improving the profitability model of its Starlink satellite network and supporting the company's expansion into emerging tracks such as orbital computing and space manufacturing. Morgan Stanley estimates that a single Starship mission carrying next-generation Starlink satellites could deploy a scale of bandwidth equivalent to one to more than two months of total launches by the Falcon 9 rocket. The report says each Starlink V3 satellite has roughly 10 times the downlink bandwidth capacity of a V2 Mini satellite launched by Falcon 9. After 26 Starlink V3 satellites were deployed on the 14th test flight, Jonas expects the next mission to carry a similar or even larger payload. Starship can carry up to 60 such satellites, providing an opportunity to accelerate deployment while reducing the number of launches needed to expand the Starlink network. The analyst warned that technical challenges remain severe, especially engine failures that have repeatedly appeared in recent Starship test flights. Three launches involving the V3 configuration all experienced booster engine problems before splashdown, and two of them also had spacecraft vacuum engine failures. Although the number of booster engines successfully ignited during landing attempts has improved, another setback would delay hardware reuse progress and limit the launch cadence in 2027. Morgan Stanley does not expect SpaceX to attempt to catch the booster on the 15th test flight, citing the engine failure in the previous mission. However, the firm lists successfully recovering both the spacecraft and booster in a single test flight and subsequently achieving V3 hardware reuse as an important milestone for meeting the program's commercial goals. The firm's $300 price target reflects a sum-of-the-parts valuation, with connectivity at $118 per share, enterprise AI at $165 per share, external launch at $8 per share, and X platform and consumer AI at another $8 per share. This valuation underscores Morgan Stanley's view that Starship's biggest financial contribution may come from driving growth in other businesses rather than merely generating revenue from commercial launches. Jonas estimates that at around $160 per share, investors value SpaceX's launch and connectivity businesses at about $127 per share, with only about $33 attributable to AI. That implied AI valuation is about 3 times the 2028 expected enterprise value/sales of a certain cloud infrastructure business, suggesting substantial upside if the company successfully executes its computing strategy. Morgan Stanley noted that further progress in Starship development, new AI product launches, and additional cloud infrastructure contracts priced at about $30 to $50 per watt are potential catalysts that could drive the stock toward its $300 target price. The firm also sees opportunities from expanding satellite connectivity and deploying computing infrastructure in orbit. The report said that for the stock to fall to around $100 over the next 12 months, several conditions would likely need to be met at the same time: a significant slowdown in AI development, a major Starship test failure, and large-scale equity dilution. Other risks include Starlink user growth falling short of expectations, higher infrastructure capital expenditures, delayed regulatory approvals, and weaker-than-expected monetization of enterprise AI services. Morgan Stanley forecasts SpaceX earnings per share of $0.55 in 2026, rising to $2.54 in 2027 and $6.01 in 2028. These estimates imply a significant acceleration in profitability, although the company's valuation still depends on ambitious growth assumptions and successful execution across multiple businesses. The firm's core argument is that Starship's progress toward full reusability could become an important DRIVE for this growth, and the 15th test flight will provide an initial test of whether those expectations can be met.