Virgin Galactic Soars as Analyst Pack Separates

Richard Branson has begun the countdown to his Virgin Galactic spaceflight, and he is not the only one that is blasting off. Virgin Galactic’s stock has been on a tear ever since the billionaire entrepreneur revealed that he would be boarding a test flight to space along with a full crew on July 11, beating rival Jeff Bezos to the punch. SPCE shares are up 15% in the month of July so far, including today’s 10% jump as the launch of the spaceflight draws near.

Tug of War

Wall Street firm Cowen is convinced that the good times will continue for Virgin Galactic, now that Branson has pulled a rabbit out of his hat and jumped ahead in the space race. Analysts at the firm have reportedly assigned a USD 51 price target on the stock, more than double the previous target of USD 23. Cowen is looking to 2022, where it has “turned more positive about the prospects of a successful commercial spaceflight program.”

Cowen has reportedly become the most bullish Wall Street firm on SPCE, with analyst Oliver Chen confirming his “outperform” rating on the stock. Chen has long been bullish on Virgin Galactic and started coverage of the stock with a “buy” rating last year. Even then, he had a positive long-term outlook on the prospects for space travel.

Good Times Already Priced In?

Before Branson rescheduled his flight to sooner, Bank of America wrote off Virgin Galactic. The firm downgraded the stock two places from buy to sell after shares shot up to nearly USD 56 in light of the analyst’s price target of USD 41. The stock is currently hovering at just under USD 50.

Bank of America analyst Ronald Epstein said at the time that the good news had already been priced in. Investors, however, are predicting on forums that with a successful flight on Sunday, the stock could have more runway for gains.

Virgin Galactic started to get on the radar of retail investors after it joined the list of meme stocks on the WallStreetBets Reddit forum. The stock has been heavily shorted as the company has yet to generate any revenues and most recently reported a net loss of USD 130 million.

If stocks were still trading on fundamentals, then its market cap of USD 11.8 billion would be alarming. In the era of WallStreetBets, retail investors and meme stocks, however, Virgin Galactic’s lofty valuation is not too farfetched.