Shares of the company Virgin Galactic, working in the space passenger flights on Monday announced record third growth spurt in its history. Two analysts on wall street have joined the rating of the shares of Virgin, urging their purchase, and one of them is called the growth potential of the company “unprecedented.”
Shares of Virgin Galactic (SPCE), an increase of 77.6 per cent since the beginning of the year, Monday closed with a growth of 24.83% to $20,51.
Two analysts from reputable investment firms initiated a stock assessment of the Virgin. Bank of America (BofA) Securities gave a rating of “buy” and target price of $35, an analyst at Susquehanna appreciated the “Positive” rating and target price of $20. It is noteworthy that none of the 12 investment analyst firms on wall street, evaluating the stock of Virgin, does not give them a rating of “sell”.
“Although Virgin Galactic has not yet yielding revenues, the company is preparing to begin servicing customers in early 2021,” wrote Bank of America analyst Ron Epstein. “We believe that the growth potential of the Virgin has no equal and the current nascent stage of the company offer investors a unique opportunity of buying shares.”
On 28 October last year Virgin Galactic, founded by British entrepreneur Richard Branson, became the first commercial space company, listed on the stock exchange.
In addition to the expensive services of space travel, analysts say the potential of the Virgin Galactic passenger space at hypersonic airplane around the world to travel at a speed more than three times the speed of sound.
“Although Virgin Galactic has no income, and other competitors are ahead in the development of hypersonic aircraft, we recognize that the unprecedented vertically integrated production system Virgin Galactic gives the company some advantage in this market” – said an analyst at BofA Securities.
Virgin produces most of the components of their rockets and spacecraft from the designs of carbon fiber to the avionics and flight simulation on their own.
In June, the company signed an agreement with NASA for the training and equipping of future space travelers, the desire to encourage space tourism.
The business of space tourism Virgin has not yet begun commercial service and today the company spends huge amount of money that represents risks for investors. Over the last 3 quarters of the losses of the Virgin were: $55 million for the 4th quarter of 2019, $53 million and $54 million for 1 and 2 quarter of 2020, respectively.
Risks to the business model, the Virgin also include an accident wreck fatal, such as those that occurred in 2014.
“Accident with a fatal outcome, although unlikely, could jeopardize the business model. To date, Virgin Galactic has carried out a complete mission (in space) only two times,” said Bank of America analyst Ron Epstein.
In August, Virgin Galactic announced to shareholders that it plans to send its first customers into space next year. First test flight will make four members of the Virgin in early 2021, and then the first commercial flight will take place with the participation of the company’s founder Richard Branson that will mark the start of commercial flights.
Competitors public Virgin Galactic are private companies: Blue Origin, founded by Gen. Director Amazon.com Inc. (AMZN) Jeff Bezosa and SpaceX, founded and led by Gen. Director Tesla, Inc.(TSLA) Elon Musk.
Analyst Charles Minervino from Susquehanna Financial, commented on the potential of the Virgin: “We consider Virgin Galactic as a pioneer of space technology with a truly unique offer that will allow both civilians and professionals to access space for entertainment and research purposes”. According to him, the company intends to satisfy the “significant latent demand for space tourism”.
At the same time, the analyst noted that the company is still in its early stages, so he’s not expecting “positive profits (EBITDA) or free cash flow until 2023 and 2024 respectively, which, of course, is a fundamental risk.”
“Future business opportunities of the company can be much wider than what is seen now from the public and leisure space travel to state contracts and future high-speed commercial travel,” said Minervino.