Daiwa Keeps Neutral on SpaceX, $140 Price Target

Daiwa Securities analyst Jairam Nathan reiterated a Neutral (3) rating and $140 price target on SpaceX (NASDAQ: SPCX).

“SpaceX (SPCX) reported strong 3Q26 results, with revenue increasing 161% yoy to $14.6bn and adjusted EBITDA rising 306% to $8.8bn, exceeding Street expectations (chart 1).

The upside was broad- based across all three segments, although SI was the largest contributor.

CFO of $9.6bn was below consensus by $906mn; nevertheless, the FCF loss of $10bn was $1.6bn narrower than expected. Space: The Space segment turned profitable in 3Q with adj. EBITDA of $357mn.

Revenue exceeded expectations reflecting higher MTs per launch. Gross margins expanded close to 10%-points on a qoq basis.

Starship Flight 15 will attempt to catch both the booster and ship and if successful, would mark solid progress towards reusability.

On the potential Tesla merger, Elon Musk pointed to a committee being created to assess the merits of such a combination.

Any such combination would require the approval of over 50% of Tesla’s outstanding shares.

Connectivity: Revenue grew 69% yoy and exceeded consensus by $331mn (chart 1), driven by both consumer and enterprise & government segments.

Higher than expected ARPU of $69 drove consumer segment revs despite net adds and total Starlink consumers coming in below Street (chart 2).

Enterprise & government revs increased 91% yoy, supported by continued enterprise & government adoption including aviation.

Slower growth in costs, especially R&D, drove the far higher growth of 99% yoy in OI.

Adjusted EBITDA of $3.5B rose 82% yoy, with margin of 66.7% beating Street’s 59.8% despite continued investment in the Starlink constellation & Starlink Kit V5 deliveries.

Greater-than-expected capex increased 53% yoy. SI (formerly AI): Revenue surged 830% yoy to $7.56bn, driven by the activation of new cloud services agreements, alongside Cursor and growing Grok demand.

Adjusted EBITDA increased to $4.95bn from $1.15bn in 2Q, with margin reaching 65.5%, 4.3pt above Street expectations. Operating income turned positive despite $1.2bn in Cursor-related SBC.

Nameplate compute capacity increased only 21% qoq, versus 220% growth in solutions and infrastructure revenue, underscoring improved monetization of installed capacity.

Management reiterated sub-one-year payback periods for new compute deployments, supported by strong demand and rising cloud contract renewal prices.”

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