The last time I weighed in on Virgin Galactic (NYSE:SPCE), I said, “With anticipation space tourism could soon take flight, coupled with bullish analyst, SPCE stock could easily run back to recent highs.”
That was on Sept. 15, as the SPCE stock traded at $17.48.
Today, it’s up to $22.10 and could easily rocket back to previous highs of $27.55 by Oct. 22 — the day Virgin Galactic is set to do another test flight. Better, if that test flight is successful, SPCE could really blast off.
A Closer Look at SPCE Stock
So far, 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. Better, Bank of America and Susquehanna now rate the SPCE stock a buy.
“While Virgin Galactic is not yet operational, the company is gearing up to begin serving customers in early 2021. We believe SPCE’s growth potential is unparalleled vs. our coverage and the current nascent stages of the company provide investors with a unique entry point into the stock,” Bank of America’s Ron Epstein said, quoted by CNBC.
If its next test flight is successful later this month, the company could fly its founder, Richard Branson to the stars by Q1 2021. That could also mark the start of its commercial program.
The Space Tourism Future
Bank of America also believe the space market could hit $1.4 trillion by 2030, from a current valuation of $415 billion. That is, if Virgin Galactic can fly paying customers, and build a steady stream of revenue. Unfortunately, there are also risks of potential failure, as always.
We’ll know more this Oct. 22 after new tests of Space Ship Two.
“The first flight will have two pilots on board and will contain NASA payloads. A second powered test flight will follow with a crew of two test pilots in the cockpit and four mission specialists in the cabin. The primary objective of the second powered flight will be to evaluate the full customer cabin and hardware, as well as procedures and training details,” says Investors’ Business Daily contributor Gillian Rich.
It’s a wait and see at this point. But we do know investors will be paying very close attention. Should Virgin Galactic be successful, the sky’s the limit.
Earnings and SPCE Stock
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.
The Bottom Line of Virgin Galactic Stock
There are a good number of bullish analysts that see big things ahead for the SPCE stock. Bank of America sees the industry achieving a valuation of $1.4 trillion over the next decade. Folks are already lining up for space tourism. And the SPCE stock is already surging on anticipation.
If all goes well, I’d like to see shares of SPCE closer to its recent highs by the Oct. 22 test date. From there, the stock could double on success. Stay tuned for more.
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.
