Investing.com -- Wolfe Research initiated coverage of Elon Musk’s SpaceX (NASDAQ: SPCX) with an Outperform rating and a $175 price target, ahead of the company’s Friday market debut on Nasdaq after pricing the largest-ever U.S. IPO at $135 a share.

The offering raised a record $75 billion, valuing the rocket, satellite and AI company at $1.77 trillion, one of the world’s most valuable listed firms.

Wolfe’s $175 target implies roughly 30% upside and is based on 16 times 2028 sales and 54 times 2028 EBITDA. Analysts Myles Walton and Peter Supino argued that SpaceX’s push toward near-zero launch costs creates a competitive position few rivals can credibly challenge, projecting 70% top-line growth and a near-doubling of EBITDA margins through 2030.

"SpaceX turned a competitive moat into an ocean of opportunity that we don’t see others crossing," they wrote.

The bull case rests heavily on Starship, the company’s next-generation fully reusable rocket still in testing. Wolfe estimates successful reusability would cut incremental launch costs from roughly $14 million per Falcon 9 flight to under $5 million for Starship, with minimum costs approaching $1 million in fuel.

Without Starship, the firm sees 2030 and 2035 financial targets cut by 35% and 50%, respectively.

"We don’t expect SpaceX to out-innovate Anthropic or OpenAI on the model side, but we expect SpaceX to build a cost advantage into the compute end game through verticalization and space access; but that will be moot if we are all in an AI bubble," the analysts wrote.

Starlink is modeled as the most reliable near-term earnings engine, with the Connectivity segment having already crossed a key milestone in 2024 when EBITDA-less-capex turned positive. Wolfe projects Connectivity EBITDA exceeding $90 billion by 2030 as next-generation satellites expand broadband and mobile subscriber bases, with Starlink capacity growing 12-fold over that period.

The AI segment, boosted by SpaceX’s acquisition of xAI and a pending deal for coding platform Cursor, is seen as the fastest-growing part of the business, anchored by recent compute contracts with Anthropic and Google worth $26.4 billion annually.

Zooming out, Wolfe sees the bigger strategic picture as SpaceX’s bid to own the entire logistics stack from transport to communications to power — and with its current lead, the analysts see little sign of where serious catch-up competition would come from.

At the same time, the analysts flagged meaningful risks. Starship has yet to achieve orbital flight, and Musk’s history of ambitious timelines warrants caution. "Investors should be eyes-wide-open as to the lack of realism in many of the targets," the analysts said.