Oppenheimer launches Wall Street’s first coverage of SpaceX with bullish outlook

June 11 (Reuters) – Oppenheimer became the first global brokerage to start coverage of SpaceX (SPCX.O), opens new tab, ahead of the rocket ​and AI company’s highly anticipated $75 billion market debut on Friday.

The brokerage ‌issued an “outperform” rating and set a price target of $190, implying an upside of nearly 41% to SpaceX’s IPO price of $135.

The $190 price target means Oppenheimer expects Elon Musk-led SpaceX, aiming for ​a $1.75 trillion IPO valuation, to notch a market capitalization of about $2.5 ​trillion in the next 12-18 months.

“We see it as the ⁠only vertically integrated AI company with the required capital, data, LLMs, hardware, ​manufacturing and engineering talent,” Oppenheimer analyst Timothy Horan said in a note published ​on Thursday.

Horan expects the Starlink satellite internet service to be the main cash generator, and SpaceX’s AI business, including xAI, to become the largest contributor over time.

An eventual merger ​with Tesla (TSLA.O), opens new tab is “plausible”, Horan noted, but believes both companies will “remain a quasi-vertically ​integrated ecosystem” to maintain access to capital.

New Street Research soon followed, initiating coverage with a ‌12-month ⁠price target of $165.

But not all analysts are bullish.

Earlier this month, Morningstar analysts pegged SpaceX’s valuation at $780 billion, less than half of what the company is reportedly targeting in its IPO, saying prospects for its AI business, which includes xAI ​and social media platform ​X, were ⁠uncertain.

Unlike the IPO’s underwriters, which must observe a post-listing quiet period before initiating research coverage, brokerages outside the syndicate ​face no such restrictions and can publish their views on ​the stock ⁠shortly before or immediately after its market debut.

J.P. Morgan, Goldman Sachs and Morgan Stanley are among the more than a dozen underwriters for the IPO.

Oppenheimer’s Horan ⁠expects “an ​initial demand/supply imbalance on SPCX shares given broad ​retail demand and accelerated index inclusion,” following the market debut.