Wedbush analysts are taking a bullish view of the space sector, initiating coverage of SpaceX and other stocks
SpaceX's initial public offering has highlighted the steep valuations associated with some space firms, according to at least one analyst.
After a recent rough stretch, investors now have a promising entry point into the defense and space sectors, according to bullish analysts.
Wedbush Securities this week initiated coverage of a handful of defense and space stocks, including AeroVironment $(AVAV)$, Kratos Defense & Security Solutions $(KTOS)$ and SpaceX $(SPCX)$. The firm also covers Voyager Technologies $(VOYG)$ and Planet Labs $(PL)$, and it rates all five stocks at outperform.
In a note to clients, Wedbush's Daniel Ives and Sam Brandeis suggested that investors take advantage of recent pressure on space stocks, which they said stemmed from a broader rotation out of long-duration growth stocks, renewed concerns over a U.S. government shutdown and the potential rejection by Congress of the Defense Department's budget request.
The analysts argue that opportunities associated with the sector are "largely insulated" from what they called "budget politics overhang." As examples, they cited demand for autonomous weapons systems and commercial space revenue, which are core to their thesis for the sector.
"We believe this dislocation marks the most compelling entry point into the sector in a generation," Wedbush said, pointing to potential growth drivers such as the U.S. Golden Dome project and other national-security opportunities.
Planet Labs and Voyager shares fell 35% in June, while Kratos's stock shed 22%, according to FactSet. AeroVironment was set to post a bigger loss in June, but the stock surged 19% on Tuesday after a strong earnings report excited investors. Still, AeroVironment's stock dropped 20% in June, according to FactSet.
Wedbush sees room for Planet Labs shares to rise 51%, AeroVironment shares to increase 45% and Kratos shares to jump 66% from current trading levels. The firm, which transferred coverage of Voyager and Planet Labs to Brandeis on Tuesday, lowered its target for Voyager to $46 per share from $50 a share. Still, Brandeis's new target implies ample upside of 38%.
Government contracts are the backbone of the space and defense industries. The U.S. government accounted for a fifth of SpaceX's revenue last year, while Planet Labs attributed 82% of its revenue in the first quarter of 2026 to contracts tied to civil government services and defense and intelligence solutions for governments.
NASA is also behind much of the sector's growth. On Tuesday, the agency awarded contracts for four new missions sending payloads to the moon in late 2028 as part of its wider lunar ambitions. Intuitive Machines (LUNR) was awarded $148.3 million for one mission, while Firefly Aerospace $(FLY)$ won a $144.2 million contract.
The lunar logistics startup Astrobotic Technology was also given $297.9 million to carry out two missions. In early June, Astrobotic said it would be acquired by Voyager in what will be that company's latest purchase.
Voyager shares rallied 7% on Tuesday and are up by about 1% in early trading on Wednesday. Intuitive Machines' stock is up by more than 5%, while Firefly shares are trading 2% higher in early action.
The broader space-sector downturn is also related to SpaceX's initial public offering, according to experts. The offering valued SpaceX at more than $1.7 trillion, and the company is currently valued at more than than $2 trillion.
However, the stock is far off its highs and has been subject to wild swings since its June 12 trading debut. Shares shed 6% in early trading on Wednesday.
The IPO highlighted the steep valuations associated with some space firms, CFRA analyst Keith Snyder previously told MarketWatch.
"I think there's a little bit of kind of coming to terms with that in the space sector," Snyder said. "While the growth is there, I think people are starting to realize it's going to take more time than we thought for this industry to really take off."
Snyder is among the few analysts with a sell position on SpaceX, although only about a dozen have initiated coverage so far, according to FactSet. More analyst coverage is expected next week after the end of a quiet period that has restricted banks involved in the IPO from publishing recommendations.
SpaceX is "well-positioned to become a major hyperscaler with its vertically integrated platform across connectivity, launch, and AI infrastructure," Ives said in a note to clients, calling the company "one of the most differentiated assets" in the technology sector.
Ives - who has long had a favorable position on Tesla $(TSLA)$, which like SpaceX is headed by Elon Musk - now has a $190 price target on SpaceX, implying growth of about 18% from current trading levels.
The research firm Zephirin on Monday reiterated its $310-per-share price target, which implies growth of 93% from current levels. The firm cited the market's "underappreciation" of the inclusion of SpaceX in passive index-tracking funds and of its AI compute deals.
"We believe the recent post-IPO correction reflects a normalization in expectations rather than a deterioration in fundamentals," the Zephirin note said, calling the pullback an "attractive buying opportunity."
-William Gavin
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July 01, 2026 11:22 ET (15:22 GMT)
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