Deutsche Bank upgrades AST SpaceMobile to Buy with a $93 target

Deutsche Bank analyst Bryan Kraft upgraded AST SpaceMobile from Hold to Buy on Monday, October 12, maintaining a $93 price target. The target represents substantial upside from Friday's closing price of $50.97. The upgrade reverses a downgrade issued in May, which followed valuation concerns and launchpad delays after the New Glenn explosion.

Shares of AST SpaceMobile have fallen roughly 65% from their all-time high in May. That decline included a drop of approximately 10% on Friday, October 9. Kraft stated that the selloff was misguided. The market reaction followed SpaceX's announcement on Thursday, October 8, to buy 14 MHz of 800 MHz spectrum from Grain Management, which also caused shares of AT&T, Verizon, and T-Mobile to drop between 10% and 13% on Friday.

According to Kraft, SpaceX's spectrum purchase does not make it more competitive with AST SpaceMobile as a partner for mobile network operators. AST SpaceMobile focuses on cellular partnerships rather than direct-to-consumer services. Kraft estimated that spectrum value alone accounts for all but $10 per share of the company's enterprise value at current prices.

Deutsche Bank also highlighted the direct-to-device joint venture reached on Thursday, October 1, by AT&T, Verizon, and T-Mobile. Kraft noted that T-Mobile appears to have removed many references to Starlink from its website, making it increasingly likely that T-Mobile will switch from Starlink to AST SpaceMobile as its direct-to-device partner through the alliance.