Shares of rival Starlink soar thanks to Verizon deal. Does it make sense to buy?

Shares of AST SpaceMobile, which develops satellite infrastructure, rose more than 10% on October 8, bringing its capitalization growth this year to nearly 300%. The company has agreed with U.S. mobile operator Verizon to launch satellite services in 2026 that will operate throughout the United States. This agreement will give Verizon customers direct connectivity, without additional equipment. Analyst William Blair called it a "competitive victory" over Elon Musk's Starlink.

Quotes of the satellite operator AST SpaceMobile, competing with the network Starlink Elon Musk, jumped at the opening of trading on October 8 by more than 20%, but then cut the growth in half, remaining at the time of publication of this text in the plus by 10.6%.

The company announced an agreement with Verizon, one of the largest mobile carriers in the U.S., to provide cellular service from the space. The service is expected to launch next year, with terms of the deal not yet disclosed.

As a result of this partnership, Verizon customers should be able to connect directly to AST SpaceMobile's satellite network, without special equipment. This will allow them to stay connected "wherever they are - from mountain trails to urban centers and everything in between. Verizon specified that the agreement was signed after successful tests of the AST SpaceMobile network confirmed its performance.

William Blair analyst Louis DiPalma called the deal a "competitive win" for AST SpaceMobile over Starlink, Barron's wrote. "We believe this agreement gives AST a significant advantage over a possible scenario in which Verizon could have moved to partner with Starlink," he said. DiPalma recommends buying the satellite company's securities; he gave them a Market Perform rating.

At the same time on the eve, October 7, Scotiabank analyst Andres Coelho worsened his assessment of AST SpaceMobile shares - from neutral level Sector Perform to Sector Underperform, equivalent to the advice to sell these securities, Bloomberg reported. The target price set by Coelho implies a drop of more than 43% from the closing level on Oct. 7. According to the Scotiabank analyst, the company may face "painful corrections" after the rally that brought AST's capitalization growth to 290% since the beginning of the year on Oct. 8.

However, only one analyst is bearish on AST SpaceMobile shares, MarketWatch shows . Seven recommend to buy these securities, four advise to hold. The average target price is already much lower than the current quotations - $52.7 against $74.8 at the closing on October 7.

This article was AI-translated and verified by a human editor