After reaching highs in the initial days following its mid-June IPO, SpaceX SPCX shares fell sharply, declining about 48% through late July. However, since the start of August, the aerospace company’s stock has turned the tables, rebounding about 58%.
Morgan Stanley’s MS bullish call on Sunday added to SPCX’s momentum, with shares rising about 7.7% on Monday to their highest level since mid-June. SPCX rose about 0.40% during pre-market hours on Tuesday.
According to analysts at Morgan Stanley, SpaceX is “cheap” at current prices, highlighting potential catalysts, including “future AI product releases, Starship progress, and additional neocloud contracts,” as quoted on a CNBC article.
With a Buy recommendation, Morgan Stanley analysts have set a $300 price target, suggesting about 75% upside from Monday’s close of $171.09. As quoted on the abovementioned article, Morgan Stanley analysts recommended buying SpaceX shares ahead of the next planned Starship test flight and the company’s third-quarter earnings report, which is expected in late October.
What's Driving Morgan Stanley's Bullish SpaceX Call?
According to analysts at the investment bank, a successful attempt to catch the Starship upper-stage ship in the upcoming test flight, Starship flight 15, could mark the company’s most significant positive development since its IPO.
Adding to the bullish case for SPCX is the company’s AI business. SpaceX’s AI unit. Elon Musk said on Sunday that it is expected to be named SpaceXSI. It is generating significant revenues by renting out computing capacity. SpaceX’s AI business is gaining traction, with Anthropic and Google already among its major customers and it has signed multibillion-dollar deals. Microsoft is expected to become another key customer.
As reported by Reuters, according to Anthropic’s confidential IPO prospectus, Anthropic is expected to spend as much as $84.5 billion through 2029 on NVIDIA-powered computing capacity supplied by SpaceX’s AI unit.
Into SPCX’s Stock Outlook
SpaceX currently has an average brokerage recommendation (ABR) of 1.77 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 39 brokerage firms. The current ABR compares to an ABR of 1.83 two months ago based on 35 recommendations.
Of the 39 recommendations deriving the current ABR, 25 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 64.1% and 7.69% of all recommendations. Two months ago, Strong Buy made up 62.86%, while Buy represented 5.71%, indicating that the majority of the analysts remain bullish.
Based on short-term price targets offered by 35 analysts, the average price target for SpaceX comes to $221.97, ranging from a low of $75.00 to a high of $800.00. The average price target represents an increase of 29.74% from the last closing price of $171.09 (as of market close on Oct. 5). SPCX has a Zacks Rank #2 (Buy) and a Momentum Score of A.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tap Into SpaceX's Growth With These ETFs
Here, we have highlighted ETFs with exposure to SpaceX.
Roundhill Space & Technology ETF MARS has an exposure of 26.76%.
Global X Space Tech ETF ORBX has an exposure of 24.94%.
VanEck Space ETF WARP has an exposure of 22.38%.
VegaShares Space & AI ETF XSPC has an exposure of 17.66%.
WisdomTree Space Economy Fund WSPC has an exposure of 17.7%.
Procure Space ETF UFO has an exposure of 15.80%.
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Procure Space ETF (UFO): ETF Research Reports
Space Exploration Technologies Corp. (SPCX): Free Stock Analysis Report
Global X Space Tech ETF (ORBX): ETF Research Reports
VanEck Space ETF (WARP): ETF Research Reports
Morgan Stanley (MS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).