Buy Virgin Galactic Stock Because 250,000 People Want to Go to Space. (And Can Afford It.)

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Aug. 31, 2021 11:04 americium ET

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The Virgin Galactic SpaceShipTwo abstraction level Unity returns to world aft the mothership separated, astatine Spaceport America (Photo by PATRICK T. FALLON/AFP via Getty Images)

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Stock successful space tourism pioneer Virgin Galactic is connected the determination Tuesday aft it recovered a caller bull connected Wall Street—one that believes hundreds of thousands of radical volition yet wage to acquisition weightlessness.

Galactic (ticker: SPCE) banal is up astir 7% successful aboriginal trading. The S&P 500 is down 0.2%. The Dow Jones Industrial Average is disconnected astir 0.1%.

Jefferies expert Greg Konrad is the crushed for the jump. He is excited astir abstraction tourism. And helium is recommending his clients bargain Virgin Galactic shares to nett from the perchance immense caller market. Konrad launched sum with a Buy standing and $33 terms target.

His “attractive outlook is boosted by proviso ramping with further spaceships driving capableness to 660 flights/year by 2030 up from capableness of astir 36 [a year] today,” wrote the expert successful a Tuesday report. Konrad projects that capableness volition make $1.7 cardinal successful income and astir $680 cardinal successful operating profits by the extremity of the decade.

He doesn’t spot immoderate problems filling the capacity. Konrad surveyed 223 radical with nett worths greater than $1 cardinal and recovered astir 37% were funny successful going to space. What’s more, 20% were consenting to walk 5% of their nett worthy to get there. “Coupled with rising wealth, this implies a potential[$120 billion] marketplace for commercialized abstraction implicit time,” added the analyst.

That is based connected astir 250,000 radical with the means, and willingness, to question to space. It’s the full marketplace and not the yearly market. But with 660 flights capable to service little than 4,000 of the 250,000 each year, Galatic request tin agelong retired for years.

A Galactic spacecraft seats six. Konrad’s mean summons terms successful 2030 is $500,000 per seat.

It’s a needed bullish instrumentality for the stock. Overall, Wall Street has grown lukewarm connected Galactic aft shares had a large tally successful 2020. Back astir 1 twelvemonth ago, 100% of analysts covering the banal rated shares Buy. But the banal was trading astatine astir astatine little than $18 a share.

Now with the banal astatine $26.88, lone 36% of analysts, oregon 4 retired of 11, complaint shares Buy. The average Buy-rating ratio for stocks successful the S&P is astir 55%. The mean expert target price is astir $35 a share, implying gains of astir 30%.

Back successful September 2020, erstwhile everyone rated shares Buy, the mean expert terms people implied gains of much than 40%. Those are large implied gains. Wall Street seems to privation a ample imaginable instrumentality for investing successful caller markets.

Write to allen.root@dowjones.com

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