Bernstein Slashes Targets On VZ, CHTR, T, CMCSA, TMUS Stocks: What's The SpaceX Connection?

• While Starlink is not expected to materially affect telecom operators in the near term, Bernstein said it still adds another competitor to an already saturated and highly competitive market.

• The firm added that uncertainty around Starlink's long-term strategy is likely to persist, prompting it to lower price targets across the telecom sector.

• Meanwhile, reports have also suggested that SpaceX has held executive-level discussions with Charter Communications about a consumer mobile offering to leverage existing terrestrial infrastructure to accelerate its entry into the broader telecom market.

Wall Street is beginning to price in SpaceX's telecom ambitions. Equity research firm Bernstein slashed the price targets on five major telecom operators on Monday, citing valuation risks tied to SpaceX's (SPCX) Starlink.

The company lowered price targets on Verizon Communications (VZN), Charter Communications (CHTR), AT&T (T), Comcast (CMCSA) and T-Mobile US (TMUS).

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Last month, several media reports said SpaceX is planning to launch a direct-to-consumer Starlink mobile service and is considering building its own terrestrial wireless network in the U.S.

Why Bernstein Cut Telecom Price Targets

While SpaceX's Starlink is unlikely to have a substantial near-term impact for telecom companies, it "represents another competitor in an already mature and highly penetrated broadband market," Bernstein reportedly said in a note, as per TheFly.

The analyst said the prospect of a Starlink mobile offering could intensify competition in the U.S. telecom sector, making subscriber gains increasingly dependent on taking market share from rivals.

The firm added that uncertainty around Starlink's long-term strategy is likely to persist, prompting it to lower price targets across the telecom sector.

VZ, CHTR, T, CMCSA, TMUS Target Cuts

How Much Bernstein Cut Each Stock Target

Bernstein lowered the price target on Verizon to $44 from $49 and maintained a 'Market Perform' rating on the shares, as per TheFly. The revised target still implies an upside of about 3% from current levels.

The firm cut Charter's price target to $170 from $210 and kept a 'Market Perform' rating on the shares, implying an upside of about 29% from current levels.