Morningstar lifts SpaceX fair value after strong quarter, still far below stock

SpaceX’s quarter and Morningstar’s reaction

Yahoo Finance reports that SpaceX’s third quarter came in well above expectations, with revenue beating analysts’ estimates by $1.9 billion. In response, Morningstar raised its fair value estimate for the company to $70 a share from $62. Even after the increase, that valuation is still less than half of SpaceX’s $147.79 close on Oct. 20.

The article says SpaceX’s stock was up 9% in morning trading after the report. It also notes that analysts’ views are split widely, with JPMorgan’s Doug Anmuth moving in the opposite direction and lifting his target to $500 from $240. The article says the gap between those estimates depends on how much investors believe Elon Musk’s AI-related goals.

What SpaceX reported for the third quarter

According to Yahoo Finance, SpaceX reported third-quarter revenue of $14.6 billion, up 161% from $5.6 billion a year earlier and above the $12.72 billion Wall Street expected, based on LSEG data. Net income was $4.4 billion, compared with a $1.1 billion loss in the same period last year. Adjusted EBITDA reached $8.8 billion, up 306%.

The company also reported “Super Intelligence” revenue of $7.6 billion, which was up $5 billion from the second quarter. The article says this AI business made up $6.7 billion of the $9 billion increase in revenue from a year earlier. It adds that connectivity revenue rose 69% to $5.2 billion, while space revenue increased 6% to $1.8 billion.

Why Morningstar raised its valuation

Yahoo Finance says Morningstar analyst Nicolas Owens increased the fair value because SpaceX’s data centers expanded faster than Morningstar expected. The firm described the AI buildout as a success, but it kept SpaceX at one star, which Morningstar says still indicates the stock is significantly overvalued.

The article says Morningstar has had the lowest valuation on SpaceX since the company’s June IPO. It assigned a $63 fair value at the listing, cut that to $62 after SpaceX’s $60 billion Cursor deal, and left it unchanged after the second quarter even though the stock was then trading at about twice that level.

How the Street compares and what the stock implies

According to the article, many other firms remain much more bullish. JPMorgan’s $500 target, Morgan Stanley’s $300 target and Goldman Sachs’ $245 target are all more than three times Morningstar’s $70 valuation.

Yahoo Finance says the stock price still looks expensive relative to earnings estimates. Consensus calls for normalized earnings per share of $2.25 in 2027 and $4.89 in 2028. The article says those estimates may not yet reflect Tuesday’s guidance and may need to rise. Using Tuesday’s close, SpaceX traded at 66 times 2027 EPS and 30 times 2028 EPS, and the article says the later stock jump makes those multiples even higher.

Guidance, Musk’s outlook and the next test

The article says SpaceX guided to $33 billion to $37 billion in first-quarter 2027 revenue. It notes that even the low end of that range, if applied across four quarters, would match the $132.4 billion analysts currently expect for all of 2027.

Yahoo Finance reports that Musk said on the earnings call that the company’s annual recurring revenue by the end of 2027 could be between $500 billion and $1 trillion. The article says the low end of that range is about twice the $249.4 billion analysts expect SpaceX to generate in all of 2028. It also says Morgan Stanley’s new 2028 EPS estimate of $9.45 is nearly double the consensus figure.

The article adds that analysts expect SpaceX to burn $61.2 billion of free cash flow in 2026, $110.4 billion in 2027 and $65.7 billion in 2028. Morningstar’s concern, as quoted in the article, is that demand may not keep exceeding supply forever as more capacity is deployed. Yahoo Finance says the next major test will be the fourth-quarter report, due early next year, which would be the first indication of whether SpaceX is on track for the guided first-quarter 2027 revenue range.