A day after AST SpaceMobile (ASTS -1.60%) stock got a big boost from the company solidifying a key partnership, Wall Street is rallying to the cause. Shares of the space communications company got a price target boost and had traded up 19% by 11 a.m. ET.
Is AST a potential five-bagger stock?
AST SpaceMobile is attempting to build a business that links smartphones to its satellite-based network. The technology would allow for voice calls and data connections even in dead spots, without customers having to buy bulky and costly satellite phones.
Late Wednesday, the company announced a commercial partnership with AT&T to help with the rollout of the service this summer. AST and AT&T have been working together for years, but the new agreement gives AST a powerful partner as it prepares for a launch and caused the shares to rally.
Wall Street chimed in after the markets closed. Deutsche Bank analyst Bryan Kraft raised his price target on AST to $22 from $19 and kept a buy rating on the shares. As importantly, Kraft noted the "asymmetric risk-reward" profile of a stock that closed Thursday at $4.03 per share but that he thinks will jump to $22.
Is now the time to buy AST SpaceMobile?
Kraft's price target is ambitious, but it's worth noting that two years ago AST shares traded above $12 apiece when the stock was significantly more speculative and the company was much further from a commercial launch.
Still, patience is warranted here. Space stocks are notoriously risky, and for all the progress AST has made in proving its technology works and preparing for deployment, AST still has a ways to go before it can declare itself a success.
Given the risk and the time it will take to determine whether the business plan is going to script, investors should proceed with caution.
