Bank of America’s aerospace desk put a first-ever number on the most closely watched private company in the space economy. Ron Epstein, senior aerospace analyst at Bank of America Securities, initiated coverage of SpaceX (NASDAQ: SPCX) with a $235 base case price target derived from a 2045 discounted cash flow model. The call reframes the company as a platform with four stacked businesses rather than a launch operator. And it lands as public defense contractors with space exposure struggle to keep pace with commercial competitors.
Why the $235 target matters now
Epstein’s thesis rests on capital efficiency. “The outside investment in the space business as we know it today has been about $8 billion. And for that, they’ve built the leading launch franchise, the moat around what they do for launch is truly remarkable,” Epstein said on CNBC. That framing matters because SpaceX’s launch cadence now underwrites adjacent product lines that would otherwise require their own capital stack.
The layered business model is where the upside sits. “They are a foundational enabler of the space economy. On that, they’ve built a space communications business, Starlink. They’ve built Starshield at a defense business. They’re in the midst of building an orbital compute business based on that,” Epstein said. SpaceX was recently added to the NASDAQ 100. That’s a signal that index providers are treating the private company as systemically important even without a public float.
The orbital compute wildcard
The bull case hinges on a business that does not yet exist at scale. “In our bull case, we do assume that they are making their own silicon. And that’s one of the ways they bring costs down. If you do orbital compute, you can get power in space kind of for free. You have a cooling challenge that you have to deal with, but if they can bring the cost of chips down, it really makes space-based compute affordable,” Epstein said.
The engineering picture matches independent government assessments. A GAO Science and Tech Spotlight published in April 2026 flagged that space does not cool computing hardware efficiently and that solar arrays larger than any launched to date would be required for AI training workloads. The FCC has received three applications from U.S. companies for large satellite constellations operating as data centers since January 2026, evidence that commercial demand for the concept is real.
What it means for public space peers
Epstein’s optimistic view of SpaceX comes as investors reassess legacy contractors with space exposure. Northrop Grumman (NYSE: NOC | NOC Price Prediction) reported Q1 2026 EPS of $6.14 on revenue of $9.881 billion, both beating estimates. Yet the Space Systems segment posted revenue of $2.480 billion, down 3% year over year, pressured by the wind-down of the Next Generation Interceptor program and a $71 million unfavorable EAC adjustment on GEM 63XL after a launch anomaly. Full-year guidance for Space Systems sits at roughly $11 billion in sales at about 11% margin, per the company’s Q1 8-K filing.
The market has taken notice. Northrop shares closed at $547.75 on July 6, 2026, and the stock trades at a trailing P/E of 17 against a consensus analyst target of $689.33. Citi reiterated its Buy rating but trimmed its price target to $587 from $628, citing less potential for significant beats among defense names.
What to watch next
Epstein’s guidance for investors is temporal.
“If you think about where the company is next year, that’s the wrong way to think about it. You have to think about where the company is going to be down the road,” he said. The bear case tied to Starship delays or orbital compute failure keeps risk on the table, and the read-across to public names is that traditional space budgets face redistribution. The U.S. Space Force’s FY2027 budget request totals $71.1 billion, a $39.4 billion increase over the FY2026 request. How that spending ultimately flows to launch providers such as SpaceX or incumbents like Northrop Grumman will help shape the space investment thesis through the back half of the decade. Northrop’s next catalyst comes on July 21, 2026, when it reports second-quarter results.
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