Space tourism stock pioneer
is on the move Tuesday after it found a new bull on Wall Street — one that believes hundreds of thousands of people will eventually pay to experience weightlessness.
Galactic (ticker: SPCE) stocks are up nearly 7% in early trading. The
has fallen 0.2%. The
Dow Jones Industrial Average
is about 0.1% off.
Jefferies analyst Greg Konrad is the reason for the jump. He is enthusiastic about space tourism. And he advises his clients to buy shares of Virgin Galactic to take advantage of the potentially huge new market. Konrad launched coverage with a buy rating and a price target of $33.
Its “appealing prospects are bolstered by ramping up the supply with additional spaceships capable of 660 flights per year by 2030, a capacity of about 36 [a year] today,” the analyst wrote in a report dated Tuesday. Konrad expects that capacity to generate $1.7 billion in sales and nearly $680 million in corporate profits by the end of the decade.
He sees no problems filling the capacity. Konrad surveyed 223 people worth more than $1 million and found that about 37% were interested in going to space. In addition, 20% were willing to spend 5% of their assets to get there. “Combined with rising wealth, this implies a potential[$120 billion] commercial space market over time,” the analyst added.
That’s based on about 250,000 people with the resources and willingness to travel to space. It is the total market and not the annual market. But with 660 flights serving fewer than 4,000 of the 250,000 each year, the demand for Gaatic could stretch for years.
A galactic spacecraft holds six. Konrad’s average ticket price in 2030 is $500,000 per seat.
It is a necessary bullish take for the stock. Overall, Wall Street has turned lukewarm on Galactic after stocks took a big run in 2020. About a year ago, 100% of analysts bought the stock rated stocks. But the stock was trading at about $18 a share.
Now that the stock is at $26.88, only 36% of analysts, or four out of 11, consider buying stocks. The average Buy rating ratio for stocks in the S&P is about 55%. Analysts’ average price target is about $35 per share, which represents a gain of about 30%.
In September 2020, when everyone was reviewing buy stocks, the average price target of analysts implied a gain of more than 40%. Those are big implied gains. Wall Street seems to want high potential returns for investment in new markets.
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