Virgin Galactic Holdings Inc (NYSE: SPCE) stock has been gaining serious traction on Wallstreet, now up 120% this month. 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. In addition, the company announced it had landed Federal Aviation Administration (FAA) approval for full commercial space operations. Analysts hold a neutral outlook on SPCE stock with the average price target at $3486 a share. 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, 9 analysts have listed a Buy rating for SPCE and 5 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. However, at the current trading price of $55.91 majority of the targets suggest a downside. Here are the recent price targets from institutional analysts:
- Goldman Sachs 6/25/2021 – Analyst Noah Poponak boosted the firms 12 month price target to $20 a share with a neutral rating. The target remains the lowest across Wallstreet analysts.
- Cannacord Genuity 5/26/2021 – Analyst Ken Herbet initiated coverage with a price target of $35 a share and a Buy rating.
- Sanford C. Bernstein 5/24/2021 – Analyst Douglas Harned initiated coverage at $27 a share with a Market Perform rating
- 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.
What this means for investors?
In summary, the common trend amongst institutional analysts is a majority rating of a Buy. This is a positive sign for long term shareholders looking for further price action in 2021. However, the current trading price is well above the average price target, suggesting the current price is outperforming the valuations from analysts. In saying this, majority of the targets were listed when the stock was trading at the $20 mark, meaning we may see price target boosts in the near future.
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 $3.03 million. This is an increase YOY north of 1,100%. Furthermore, the average revenue forecast for 2022 expects the company to generate $52.35 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, the stock is now trading close to its 52 week high of $62 a share. Prior to SPCE’s recent rally, the company fell as low as $16 earlier this year. 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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