Virgin Galactic (NYSE:SPCE) stock could be out of this world.
Since bottoming out at $6.90, the SPCE stock rocketed to a recent high of $27.55 before pulling back. While Virgin Galactic stock has since dropped back to $16.96, don’t it out just yet. With anticipation space tourism could soon take flight, coupled with bullish analyst, shares of Virgin Galactic could easily run back to recent highs. In fact, I’d like to see SPCE stock back to $27.55 by Oct. 22, as the company does another flight test.
Analysts are Bullish on the Potential $800 Billion Opportunity
At the moment, demand is also out of this world.
According to analysts at Cowen, 39% of people with a net worth of more than $5 million are showing big interest in paying $250,000 for a flight, says CNBC contributor Michael Sheetz. By the way, Cowen says that applies to an addressable market of about 2.4 million.
Credit Suisse also just reiterated an outperform rating on the stock. They also argue investors should strong consider the SPCE stock ahead of its next flight test on Oct. 22.
“With flight schedule visibility improving, and with scarce public investment opportunities in Space, we see a healthy demand environment for shares during the catalyst period,” Credit Suisse analyst Robert Spingarn said, as quoted by CNBC.
UBS analysts are bullish, arguing the SPCE stock could run 50% higher over the next year, as space tourism becomes an $800 billion opportunity, says Forbes’ contributor Sergei Klebnikov. The firm has a price target of $25 at the moment.
With the belief space travel could be big, the sky is the limit with the SPCE stock.
Earnings Haven’t Rocketed Higher Just Yet
If Oct. 2020 test flights are successful, Virgin Galactic has said it plans to start flying by the first quarter of 2021. That could potentially fuel a multi-year boom for the Virgin Galactic stock. In addition, in its most recent quarter, the company posted a Q2 loss of 30 cents a share on no revenue. Analysts were looking for a loss of 28 cents a share. In addition, the company has already said it received 400 deposits from potential passengers.
Those 400 deposits represent more than $100 million of potential revenue for the company.
In addition to space travel, the company also plans to offer hypersonic flights, which could become a bigger opportunity than space travel.
In fact, Virgin Galactic just unveiled a Mach 3 aircraft design, and signed a memorandum of understanding with Rolls Royce.
George Whitesides, Chief Space Officer, Virgin Galactic said, “We are excited to complete the Mission Concept Review and unveil this initial design concept of a high speed aircraft, which we envision as blending safe and reliable commercial travel with an unrivalled customer experience. We are pleased to collaborate with the innovative team at Rolls-Royce as we strive to develop sustainable, cutting-edge propulsion systems for the aircraft, and we are pleased to be working with the FAA to ensure our designs can make a practical impact from the start. We have made great progress so far, and we look forward to opening up a new frontier in high speed travel.”
The Bottom Line on Virgin Galactic Stock
With an $800 billion space tourism boom a real possibility, coupled with bullish analysts and deposits taken, SPCE stock is worth the gamble.
After pulling back to $16.96, I strongly believe the stock is worth the long-term gamble.
Remember, if Oct. 2020 test flights are successful, Virgin Galactic has said it plans to start flying by the first quarter of 2021. That could potentially fuel a multi-year boom for the Virgin Galactic stock. As we near SPCE stock’s October catalyst, we could see the stock rocket.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.