Virgin Galactic shares soar as space tourism expectations rise

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The FINANCIAL — Shares of Virgin Galactic surged nearly 25% which is highest one-day increase since April. The stock in total has gained 78% this year. Bank of America analyst Ronald Epstein set a $35 price target, more than double Virgin Galactic’s closing price on Friday. Epstein believes the commercial space market will hit $1.4 trillion by 2030. Virgin Galactic expects to advance to the next phase of its test flight program with its first powered spaceflight from Spaceport America this fall.

Shares of Virgin Galactic surged nearly 25% in trading Monday after Wall Street firms continued to set higher expectations for the space tourism stock. The stock jump came after Bank of America and Susquehanna began coverage of Virgin Galactic. Notably, the two firms join six others in recommending Virgin Galactic’s stock to investors, giving the company the eight Wall Street buy ratings – and zero to hold or sell. “No company in our coverage universe has anywhere near comparable growth potential,” Bank of America analyst Ron Epstein said. Virgin Galactic’s 24.8% jump, with shares closing at $20.51, was its second-biggest in a trading day since its public debut last year. Including Monday’s climb, the stock is up about 78% this year, CNBC reported.

Bank of America’s Ronald J. Epstein believes the commercial space market will hit $1.4 trillion by 2030. Epstein cites increased defense spending, growth in satellites, space tourism and resource extraction as ways the industry can grow. The space market was worth $414.8 billion in 2018, with government spending of $85.5 billion making up 21% of the total. Bank of America tracks 23 aerospace and defense companies and listed 14 of them in the report that had some exposure to the space industry. The space tourism sector also includes privately held Blue Origin, Sierra Nevada and SpaceX. Boeing Company  is also listed in the space tourism sector. Epstein said SpaceX is firmly in the lead over Boeing for ferrying passengers into space, Yahoo Finance wrote.

Bank of America Global Research and Susquehanna Financial Group on Monday both initiated coverage of the company founded by Richard Branson with buy-equivalent ratings. The stock was among the most actively-traded securities of the day. Bank of America analyst Ronald Epstein set a $35 price target, more than double Virgin Galactic’s closing price on Friday. He said that while the company isn’t yet operational, it’s unique because it has nearly full vertical integration by building, assembling and operating aircraft. Along with plans to start serving customers early next year, Epstein said the company’s growth potential is “unparalleled.” Still it faces risks, with only two completed missions to space so far, and any setbacks or accidents could compromise the business model, according to Bloomberg.

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In August of 2020, Virgin Galactic published Q2 results. Net loss was $63 million, compared to a $60 million net loss in first quarter of 2020. Cash position remained strong, with cash and cash equivalents of $360 million as of June 30, 2020. Adjusted EBITDA totalled $(54) million, compared to $(53) million in first quarter of 2020.

Along with its second quarter 2020 financial results, Virgin Galactic also provided an update regarding the ongoing impact of COVID-19 on its business and operations. The Company has implemented rigorous health and safety procedures and testing protocols for its employees, following guidelines from the CDC and state and local officials. The protocols and procedures implemented by the Company in response to the pandemic have limited the number of employees who are able to work on-site in the Company’s facility in Mojave, California, and at Spaceport America, New Mexico, which has slowed the Company’s pace.

Virgin Galactic expects to advance to the next phase of its test flight program with its first powered spaceflight from Spaceport America this fall, with two test pilots in the cockpit. Virgin Galactic then expects to conduct a second powered space flight from Spaceport America, with a crew of two test pilots in the cockpit and four mission specialists in the cabin. Assuming both flights demonstrate the expected results, Virgin Galactic anticipates Sir Richard Branson’s flight to occur in the first quarter of 2021.

It is interesting to note that in July of 2020 The United Arab Emirates launched its first mission to Mars. Spacecraft, called al-Amal or “Hope” was designed by the Mohammed Bin Rashid Space Centre in the UAE. The Emirates Mars Mission will be the first probe to provide a complete picture of the Martian atmosphere. The U.S. and China are also launching their own Mars missions — expected to reach the planet’s orbit around the same time as the Hope probe. Read more

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