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SpaceX (SPCX) stock closed lower on Wednesday as valuation and capex concerns overshadowed the company’s better-than-expected Q2 release.
Adding to pressure was a new research note from Piper Sandler, in which the firm lowered its price target on SPCX to $140. However, the new price target still represents potential upside of nearly 30% from here.
Following an initial post-IPO rally that drove SpaceX shares to over $200, the company has been in a sharp downtrend, currently trading more than 50% below its year-to-date high.
What Made Piper Sandler Lower Its Price Target on SPCX Shares?
Piper Sandler lowered its price target on SPCX stock due to a trio of near-term valuation headwinds.
First, the looming insider lockup expiration on Aug. 6 marks a significant overhang, given it’s expected to more than double the company’s float.
Second, management now expects fiscal 2027 capital expenditures to hit $65 billion — roughly $17 billion above prior estimates — due to aggressive orbital artificial intelligence (AI) buildouts.
Finally, SpaceX’s lucrative AI cloud contracts carry cancellation clauses, making longer-term sales durability harder to gauge.
Note that SPCX’s relative strength index (RSI) sits in the late 30s currently, indicating further room for downside before the stock hits oversold territory.
Why Is Piper Sandler Still Bullish on SpaceX Stock?
In their research note, Piper Sandler analysts nonetheless noted that SpaceX’s impressive Q2 results, featuring a whopping 92% year-on-year increase in revenue to $7.8 billion, suggest the stock is potentially undervalued at current levels.
On the earnings call, billionaire Elon Musk even highlighted remarkable operating margin leverage and guided for a recurring revenue run-rate of at least $100 billion by the end of this year.
Driven by Starlink’s rapid subscriber growth (up 17% sequentially to 12 million) and core launch dominance, SpaceX shares look poised for a 30% recovery from the current level, the investment firm told clients.
What’s the Consensus Rating on SpaceX?
Investors should note, however, that other Wall Street firms are significantly more bullish on SPCX shares than Piper Sandler.
According to Barchart, the consensus rating on billionaire Elon Musk’s artificial intelligence and space infrastructure firm sits at “Moderate Buy,” with the mean price target of $223 signaling potential for a more than 100% rally from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
