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AST SpaceMobile Climbs; Barclays Sees 'Very Significant Market'

AST SpaceMobile's 'proposition is unique and the addressable market is very significant,' Barclays says of the provider of mobile service via satellite.

AST SpaceMobile ASTS rose on Monday after a Barclays analyst initiated coverage of the space-based cellular broadband network operator with an overweight rating and $29 price target.

Shares of the Midland, Texas, company at last check were 2.4% higher at $13.06.

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Analyst Mathieu Robilliard said in a research note that AST SpaceMobile's "proposition is unique and the addressable market is very significant: extend mobile coverage everywhere via satellite."

"This promises to address a growing policy priority for governments: bridging the digital divide," Robilliard said. 

"The investment case does come with elevated risks, but if the technology works as planned and management executes, we see a compelling investment opportunity."

The analyst said that AST SpaceMobile’s project extends mobile coverage via its satellite constellations when users are out of range of cell towers. 

"Key to the project is the fact that there would be no need to modify mobile handsets to connect to the satellites," Robilliard said.

The stock had been a meme-stock favorite last month, with users in Reddit's Wallstreetbets forum saying the shares were "going to the moon."

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Robilliard strategic investors will collaborate with AST SpaceMobile to develop the project. 

In addition, he said, AST has signed a commercial agreement with Vodafone  (VOD) - Get Vodafone Group Plc Sponsored ADR Report to deliver the service and memos of understanding with a number of other telecom operators, such as AT&T  (T) - Get AT&T Inc. Report, Telefonica  (TEF) - Get Telefonica SA Sponsored ADR Report and Millicom  (TIGO) - Get Millicom International Cellular SA Report.

"This and the experienced and incentivized management team provide confidence in this endeavor despite the many uncertainties," he said.

Sgoco  (SGOC) - Get SGOCO Group Ltd. Report surged on Monday as investors continued to push meme stocks higher on expectations that momentum as well as sales and earnings potential can raise the valuations of lesser-known, lesser-proven companies.

Real Money's Timothy Collins said meme stocks may be volatile, but that's the reality of the stock market.

Last month, Deutsche Bank analyst Bryan Kraft initiated coverage of AST SpaceMobile with a buy rating and $35 price target.

If management executes on plan over the next five years, the company's intrinsic value should ultimately be "significantly higher" than the $35 target, Kraft said. 

He warned, however, that the stock could also end up being worth zero if AST's technological solution to enable satellites to communicate directly with smartphones doesn't work or scale as intended.

AST SpaceMobile went public when AST & Science merged with New Providence Acquisition NPA, a special purpose acquisition company.