The space sector is catching a lot of attention recently. With the recent rise and subsequent dip in satellite stock valuations since Monday, investors are paying more attention than usual to this area. In that sense, traders got another piece of space-investing-related news on Tuesday. Virgin Galactic (NASDAQ: SPCE), the space company founded by Richard Branson, shot up after receiving another major recommendation from Wall Street.
Jefferies’ analyst Greg Konrad initiated coverage on Virgin with an optimistic “buy” rating and a price target of $33 per share, compared to Tuesday’s trading price of around $27.1 per share. Konrad wrote that, by 2030, there will be over 660 space flights annual as spaceship production increases. According to his estimates, the total addressable space tourism market could hit $120 billion, while Virgin Galactic could see revenues of $1.7 billion by 2030.
Additionally, Konrad also conducted a survey of over 233 millionaires to see what their thoughts were on space travel. Around 37% of them said they would want to go to space one day, with 29% of them saying they would be willing to spend 5% of their net worth to do so. Based on these numbers, the Jefferies analyst came up with the $120 billion figure. Flights currently cost around $450,000 per ticket, so Konrad’s estimates would mean that those willing to spend around 5% of their network on a flight would have to have an eight-digit net worth.
Most analysts covering the stock are already incredibly optimistic about Virgin Galactic’s future prospects. Although space tourism isn’t as big of an industry as, say, satellites or rocket technology, interest in space travel is projected to continue to grow over the coming years and decades. In comparison, Jeff Bezos’ Blue Origins and Musk’s SpaceX are a bit behind Virgin when it comes to space tourism. In most other areas, however, Virgin Galactic isn’t seen as much of a forerunner as its two, larger private competitors are.
Shares of Virgin Galactic were up as much as 9.8% in response to the news. While great for the company, shares are still down around 40% since Branson made his historic space flight earlier in July. It didn’t help that the company decided to sell more than $500 million of stock just a day after the flight, effectively diluting most of those news-driven gains.
However, you also have to consider that most competing space stocks, like SpaceX and Blue Origins, are privately held companies right now. As such, Virgin Galactic is one of the only viable space tourism picks for investors looking to play that market. If SpaceX or Blue Origins does go public, don’t be surprised if investors flee Virgin to instead buy up one of these other companies.
Virgin Galactic Company Profile
Virgin Galactic Holdings Inc is a United States-based vertically-integrated aerospace company pioneering human spaceflight for private individuals & researchers, and it also manufactures advanced air and space vehicles. Using its technologies, it is developing a spaceflight system designed to offer its customers a unique, multi-day, and transformative experience. This culminates in a spaceflight that includes views of Earth from space and several minutes of weightlessness that will launch from Spaceport America, New Mexico. – Warrior Trading News
