AST SpaceMobile rises after Deutsche Bank upgrades shares to Buy

what happened

AST SpaceMobile shares advanced 3.2% in Monday’s premarket session after Deutsche Bank raised its rating on the communications company from Neutral to Buy. Seeking Alpha reported that analyst Bryan Kraft said the bank had downgraded the stock in May because of valuation concerns following the New Glenn launchpad explosion, which caused a material delay to ASTS’ launch plans.

The bank now sees an opportunity to take a more constructive stance after the recent weakness in the share price, several positive developments and potential catalysts that it believes have received little market attention. Deutsche Bank estimates that spectrum value now accounts for all but $10 per share of ASTS’ enterprise value.

“We think the -10% move on Friday was misguided since the 800 MHz spectrum SpaceX will be acquiring doesn’t make SpaceX more competitive with ASTS as an MNO partner for D2D, and ASTS isn’t targeting direct-to-consumer,” Kraft said. He added that SpaceX will primarily use the 800 MHz spectrum for that purpose. Kraft also said he believed it was becoming increasingly likely that T-Mobile would replace Starlink with ASTS as its D2D partner through the joint venture. ASTS shares had fallen 10.5% on Friday amid concerns about SpaceX’s spectrum plans.

why it matters

The report puts the focus on how SpaceX’s spectrum acquisition may affect competition in satellite-to-device connectivity and on the potential role of ASTS in T-Mobile’s D2D partnership strategy.

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