Virgin Galactic Holdings Inc (NYSE: SPCE) stock has been gaining serious traction on Wallstreet, now up 31% this week. The stock is gaining momentum after the completion of the first human spaceflight from the Spaceport America, New Mexico. The milestone marks the success of the companies third test spaceflight which will provide valuable data for the company to review and plan its next milestone. Analysts still hold a bullish outlook on SPCE stock with the average price target suggesting a 66% upside. With many questions to be answered regarding Virgin Galatic’s future, this article will breakdown the SPCE stock forecast for 2021 and beyond.
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Do Wallstreet analysts see upside in SPCE stock?
According to MarketBeat data, 7 analysts have listed a Buy rating for SPCE and 6 have listed a Hold. The general sentiment across the board is moderately Bullish, with Analyst Ron Epstein from the Bank of America currently holding a price target of $50 (138% upside from the current price). Here are the recent price targets from institutional analysts:
- UBS 5/21/2021 – Analyst Myles Walton upgraded the firms coverage on SPCE with a Buy rating and a price target of $36 a share.
- Credit Suisse Group 5/17/2021 – Analyst Robert Spingarn lowered the companies 12 month price target to $33 a share. However the analyst maintained the outperform rating on the stock.
- Sanford C. Bernstein 4/12/2021 – Analyst Douglas Harned initiated coverage at $27 a share with a Market Perform rating. This target is currently the most conservative target released in 2021.
- Truist Securities 3/22/2021 – Analyst Michael Ciarmoli initiated coverage on SPCE stock with a price target at $50 a share.
- Bank of America 3/9/2021 – Analyst Ron Epstein boosted the companies 12 month price target from $35 to $50. The firm also maintained a buy rating on the stock.
What this means for investors?
In summary, the common trend amongst institutional analysts is a valuation or price target well above the current trading price of $21 a share. For example, the lowest target released in 2021 from Sanford C. Bernstein still currently represents an upside. This is a positive sign for investors looking for entry and a reassurance for longer term shareholders. However, operating within a new industry, we can also conclude analysts are practising some caution.
What are the forecasts moving into 2021 and beyond?
Firstly, the company has not generated any revenue for the past two quarters. However this was not a huge shock for investors. The company is currently in a pre-revenue phase and does not expect to generate any revenue until later this year. The first “full revenue” test spaceflight is set to take place later this year, which is expects to generate $2 Million.
Looking forward, the average revenue forecast for Virgin Galactic in 2021 currently stands at $3.4 million. This is an increase YOY north of 1,345%. Furthermore, the average revenue forecast for 2022 expects the company to generate $54 Million. The revenue increase is set to be a bi-product of successful commercialisation in 2021/22.
The company is yet to release stronger guidance in regards to revenue. However we will continue to get a better understanding every quarter closing towards commercialisation.
Here are the risks associated with SPCE stock?
The risk- reward scenario for Virgin Galactic is very unique. SPCE is the only current company trading on the US market that will allow investors to enter the exciting new industry of space travel. The safety risk associated can definitely swing the sentiment of this stock, however I believe the method of travel is not well understood amongst the general public. I recommend having a look at the Virgin Galactic website for information on how they plan to execute commercialisation the space travel industry.
As for the volatility of SPCE stock, we have seen a swift decline in the stock price over the past 3 months. For a company not currently generating any revenue and a recent sell-off from large stakeholders, high volatility is to be expected. However, the successful test spaceflight is a monumental step forward for the company and will likely spur on a short term rally in SPCE.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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