SpaceX (NASDAQ:SPCX) shares are down about 5% on Tuesday, giving back some of the gains from a three-day rally that had carried the stock back above its $135 IPO price. Investors appear to be locking in recent gains while preparing for the next lockup expiration on August 20, when about 320 million additional shares are expected to become eligible for sale.
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High conviction on SPCX? Try Tradr's SPCM or SPCGLooking ahead, Wall Street analysts see several developments inside SpaceX that could support the business over the longer run. UBS analyst John Hodulik is particularly upbeat about the company’s progress, declaring that SpaceX is “hitting on all cylinders” as several parts of the business move forward together.
Hodulik sees progress coming from several areas, beginning with the continued development of Starship and its next planned flight. The analyst is encouraged by management’s confidence that SpaceX may have addressed the spacecraft’s heat-shield problems, while another important test awaits during the next launch. At the same time, more capable V3 satellites could accelerate Starlink’s revenue growth, while SpaceX plans a large expansion of the computing infrastructure supporting its artificial intelligence efforts.
That combination leaves Hodulik optimistic about what the various SpaceX businesses could eventually become when brought together. Rather than viewing SpaceX primarily as a rocket or satellite operator, the analyst argues that its “collection of assets is unique” and believes it “will create value over time” as management delivers on its goals. That confidence comes as SpaceX now expects to reach $1 trillion in annual revenue a year earlier than previously projected, with management targeting 2030.
To this end, Hodulik assigns SPCX shares a Buy rating, and his $210 price target implies about 59% upside from current levels. (To watch Hodulik’s track record, click here)
William Blair analyst Louie DiPalma is similarly bullish, although his thesis places greater emphasis on the relationship between Starlink and Starship. DiPalma believes Starlink is rapidly taking business from traditional telecom providers, while the upcoming V3 satellites could give the service substantially greater network capacity. Wider adoption among commercial airlines provides another avenue for expansion, with Starlink installations currently progressing among dozens of airline customers worldwide.
Yet, DiPalma sees an even larger opportunity coming from Starship, which he believes is “inching closer to the monumental milestone of full rocket reusability.” DiPalma calls Starship “a key enabler” for the connectivity and AI businesses, viewing successful development of the rocket as critical for generating free cash flow, which he playfully refers to as “star-bucks.”
The potential economics help explain his enthusiasm about what Starship could eventually enable. DiPalma calculates that 200 Starship missions carrying Starmind satellites could establish one gigawatt of computing capacity in orbit. SpaceX believes each gigawatt could eventually generate between $30 billion and $50 billion annually through leasing arrangements with customers.
Accordingly, DiPalma rates SpaceX shares an Outperform (i.e., Buy) without suggesting a price target. (To watch DiPalma’s track record, click here)
Wall Street as a whole remains upbeat on SpaceX, with the bulls holding a clear advantage. Of the 31 analysts covering SPCX, 24 recommend buying the stock, while 5 remain on the sidelines and only 2 recommend selling, resulting in a Moderate Buy consensus rating. The price targets are even more encouraging, as the $231.15 average points to about 75% upside from current levels. (See SPCX stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.