A recommendation downgrade by an analyst made for a gloomy Tuesday for AST SpaceMobile (ASTS +4.59%). Investing in the space telephony specialist felt like dialing a wrong number, as its share price swooned by almost 10% on the day. The bellwether S&P 500 (SNPINDEX: ^GSPC) did far better, landing in the black with a 0.3% increase.
Deals in space
That change was made a day after AST was socked by news that Elon Musk-owned rival SpaceX is purchasing two blocks of 5G telephony spectrum from satellite company EchoStar for its Starlink phone service.
Image source: Getty Images.
The person behind the downgrade is UBS pundit Chris Schoell, who reduced his AST recommendation to neutral from buy. He also sliced his price target to $43 per share from $62.
Not surprisingly, much of Schoell's new take on AST is based on the Starling/EchoStar deal. According to reports, the analyst wrote in his update that the arrangement gives a significant boost to AST's main competitor. It also comes at a time when AST is struggling to build out its satellite network.
Schoell doesn't feel as if this is a crushing defeat for AST. In his view, the company has good relationships with phone service carriers and advantageous technology, among other competitive advantages.
NASDAQ: ASTS
Key Data Points
Estimates cut
Nevertheless, the analyst reduced his long-term estimates for AST. He now believes the company will book $3 billion in revenue in 2030, filtering down into earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.4 billion. Previously, he was modeling a respective $3.6 billion and $2.9 billion for that year.
