SpaceX (SPCX) shares are seeing a big boost after one of the Street’s biggest bulls said it’s time to buy.
In a note titled “SPCX $159: Cheap and Cheaper,” Morgan Stanley’s Adam Jonas reiterated his outperform rating and $300 price target, saying investors have just a few weeks to “seize” an opportunity to buy the stock ahead of certain milestones.
SpaceX stock jumped 5% in early trading Monday.
168.57 +9.61 (+6.05%)
At 1:59:01 p.m. EDT. Open market.
“We believe that over the next few weeks (before Starship Flight 15), investors will be able to take advantage of a unique opportunity to buy stocks that look unusually cheap,” Jonas said.
SpaceX just completed a successful test on Flight 14, during which Starship reached low Earth orbit for the first time and deployed Starlink satellites.
The longtime Morgan Stanley analyst also expects developments over the coming months to help investors better appreciate the role SpaceX plays in AI and chipmaking efforts, “potentially unlocking earnings growth and multiple expansion for the stock.”
One of the biggest challenges Jonas faces in convincing investors is a lack of understanding of how difficult the SpaceX challenge is. He says he has attended several presentations where virtually none of his clients own the shares.
“Only a handful of people in the world understand the technical challenges of Starship’s heat shield or the inner workings of a full-rate staged combustion rocket engine to properly judge the testing path. Even fewer people can say where compute prices are headed as demand for agent tokens increases,” he said.
Valuing SpaceX purely from an AI computing perspective or a telecommunications perspective as it relates to Starlink, without considering the complex launch business, would make the stock appear relatively expensive, he explained.
It appears Jonas is going for a holistic view, with investors fully valuing the Space & Connectivity units, but not the AI opportunity, which includes computer transactions, chip manufacturing and other artificial intelligence efforts.
“We believe future AI product releases, Starship progress, and additional neocloud contracts showing continued pricing around $30-50/watt are all upside catalysts that can move the stock closer to our $300/share price target.”
Pras Subramanian is a senior transportation reporter for Yahoo Finance. You can follow it X and on Instagram.
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