Less than a month after the shares of Virgin Galactic (NASDAQ:SPCE) faced a double-digit loss in reaction to a botched test flight, SPCE stock is fired up on Thursday morning.
What is behind the surge? Stock watchers point to a tweet this morning from the space tourism company indicating that its technicians have completed the post-flight inspections and identified what caused the onboard computer to halt ignition of the rocket motor on Dec. 12. “Corrective actions have been defined and work is already underway.”
Importantly, because this fix does not seem that hard, the timeline for Virgin Galactic launching Sir Richard Branson into space and officially commencing space operations in the first half of 2021 remains solid.
SPCE Stock: Still a Long-Term Winner
InvestorPlace analyst Luke Lango, in the wake of the flight problems, called SPCE stock a “long-term winner,” encouraging investors to stick around to buy dips in the shares. “If Virgin Galactic can continue to cement itself as the safest space tourism company out there, that will go a long ways in winning over potential customers,” he observed.
Lango’s long-term model assumes 12 operational space ships by 2030, flying five flights per month, with six passengers on each flight, at an average ticket price of $300,000. Under those assumptions, he sees Virgin Galactic’s space tourism business powering to roughly $1.3 billion in revenues, with roughly 50% EBITDA margins. That lays the foundation for earnings per share to rise toward $2.50 by 2030.
Ready to Ride?
Even with this morning’s gains, SPCE stock remains 40% below its 52-week high of $42.49 touched in mid-February 2019. However, based on his calculations, Lango has a 2021 price target topping $30 a share.
At that rate, test flights won’t be the only thing that Virgin Galactic fans are anticipating.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.
