This multi-trillion stock is "cheap and getting cheaper": Morgan Stanley

Investing.com -- SpaceX (NASDAQ: SPCX) looks "cheap and getting cheaper" once its growth is taken into account, Morgan Stanley analyst Adam Jonas argues, reiterating an Overweight rating and a $300 price target on the stock.

Jonas said the shares look expensive on headline metrics, at about 30 times 2028 estimated EV/EBIT versus roughly 16 times for other mega-cap AI enablers. Adjusted for growth, though, SpaceX trades at about 0.3 times 2028 EV/EBIT/Growth, roughly 40% below the 0.5 times mega-cap median.

Even at the $300 target, it would trade at about 0.6 times, in line with Amazon (NASDAQ: AMZN) and below Alphabet (NASDAQ: GOOGL) and Meta (NASDAQ: META), he highlighted.

Jonas said investor interest has been muted. When he asked a room of 40 clients last week who owned the stock, "not a single hand went up," the analyst said, adding that "it’s been really, really quiet on SPCX lately."

Common investor concerns, such as Grok’s performance against other frontier models and spectrum access for Starlink Mobile, are well priced in. Jonas argued that valuing the company is "more of an ’and’ problem than an ’or’ problem," since investors must weigh its interlinked businesses together.

At $159, he noted the stock prices in most or all of its $127-per-share value for the Space and Connectivity businesses, leaving about $32 for AI, equivalent to roughly 3 times 2028 EV/Sales for a neocloud-type business. A drop to $100 within 12 months would require a clear slowdown in AI progress, a severe setback in Starship testing, or a material dilutive event, the analyst said.

Compute pricing is a key variable. Consensus models $17.60 per watt on 4.1 gigawatts, so each additional $10 per watt adds more than $40 billion in revenue. Jonas said SpaceX’s recent short-term neocloud contracts are priced at $30-50 per watt.

Jonas listed several catalysts, including Starship Flight 15 in late October or early November, where a ship catch "could be the biggest positive catalyst since the IPO"; third-quarter earnings in late October; Flight 16 before year-end; Grok 4.8, 4.9 and 5.0 releases; and further neocloud deals.

Potential risks include slower Starship reuse, weaker enterprise AI monetization, higher costs per watt of compute, longer time-to-power, funding needs and regulatory delays.

Original Article

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