Virgin Galactic (SPCE) - Get Virgin Galactic Report, the former SPAC founded by Richard Branson, saw its share price peak in July driven by excitement over the company’s first flight into space. But the stock’s performance has been slowly fading since then.
SPCE dropped more than 50% in the past few months (see below). Recently, Virgin Galactic shares dug deeper into the hole after the announcement of a launch delay for the company’s commercial space service, from Q3 to Q4 of next year.
While striking a skeptical tone on the heels of the recent news, Wall Street experts still see 55% upside potential ahead for SPCE. Today, Wall Street Memes looks more closely at SPCE’s bullish and bearish theses.
(Read more from Wall Street Memes: Corsair Stock: Experts Bullish, Despite Supply Chain Issues)
Neutral, but with upside
Wall Street analysts seem skeptical towards Virgin Galactic stock. Based on the 10 most recent reports published, SPCE has a neutral consensus rating. But with an average price target of over $30, the same experts have been suggesting 55% upside potential from current levels.
The bull side:
- Truist Financial is the bull of bulls, with a buy rating and a $50 price target on the stock —a whopping 150% upside potential. Despite acknowledging that space tourism race momentum has passed, he thinks that the long-term prospects look good. Analyst Michael Ciarmoli wrote:
“In a worst case scenario, we believe SPCE could see signs of a market leading position erode with the stock drifting lower. [But the launch] delay appears to be immaterial to SPCE’s longer term intrinsic value.”
- Canaccord Genuity has a buy recommendation on the stock and a $48 price target, for 139% upside potential. The analyst is not concerned that Virgin Galactic’s schedule changes will affect the company’s long-term space plans. Analyst Austin Moeller has said:
“We continue to view the enhancement period, which will raise VSS Unity’s flight readiness to every 4-5 weeks and VMS Eve’s endurance to ~100 flights, to be important to boosting customer launch cadence.”
The bear side:
- Bank of America has recently lowered its share price target on SPCE from $25 to $20 while keeping a sell recommendation. Questions around the company’s next steps is the core of the thesis. Here is what analyst Ron Epstein had to say:
“We are uncertain about the company’s ability to forecast such a future and unknown event after the recent failure to call the timing right on a relatively-known short-term event.”
- Morgan Stanley is another bear with a sell recommendation on SPCE, but with a $25 price target that still represents 25% gain potential. The analyst seemed concerned about schedule and technical issues on flight testing. Analyst Kristine Liwag wrote:
“We view it positively that the company is investing in increasing its long-term space flight capacity. However, these investments take time – sometimes more than anticipated.”
(Read more from Wall Street Memes: Progenity Stock: Wall Street Forecasts 45% Upside)
Wall Street Memes take
SPCE behaved very much like a meme stock a few months ago: up sharply in late June, down sharply in early July, and so forth. Fundamentally, investing in SPCE poses many risks due to the complexity of the company’s ambitious project to commercialize space travel, especially as competition from well-capitalized rivals ramps up.
But, for long term investors, the recent news regarding the company’s flight delays should matter little. The stock can still “skyrocket” if next year’s launch timing is worked out and the company is able to execute beyond these short-term events.
In any case, investors that choose to bet on SPCE in anticipation for outsized gains should expect turbulence (i.e. volatility) and be comfortable assuming risks that are well above market.
Get more expert analysis on "stonks"
It’s never too early (or late) to start growing your investment portfolio. Join the Real Money community for just $7.50/month and unlock expert advice from our team of 30+ investing pros.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)