Few publicly tradable companies are as fascinating as Virgin Galactic (NYSE:SPCE). The goal of space tourism is to turn the dream of space flight into a reality, at least for people who can afford the high ticket price. But at least we can say that the price of SPCE stock is still quite affordable.
One legitimate question that prospective shareholders might have is whether there’s a big enough market for space tourism. The world is still dealing with the impact of the novel coronavirus. So, some SPCE stock holders might worry that this might scare clients away from Virgin Galactic.
You might be surprised to discover that even a global pandemic can’t stop people from dreaming of space flight. Moreover, some analysts are starting to warm up to SPCE stock. Perhaps, then, you can leave some space for SPCE in your portfolio.
A Closer Look at SPCE Stock
The span of time from December of 2019 to mid-February 2020 is what I like to call the “test flight” period for SPCE stock. That’s when SPCE blasted off from $7 and change to a 52-week high of $42.49.
Due to Covid-19, a harsh dose of fear and pessimism entered into the stock market in February and March. Questions were raised among traders as to whether there would be any demand for space tourism during a pandemic.
As a result, the SPCE stock price tumbled to the $10.50 area in March. Patient investors who didn’t get shaken out of the trade were rewarded, however. In late September, SPCE headed for the skies, touching the $19 level.
Even with the apparent rebound in progress, SPCE stock holders have to keep their heads out of the clouds. Don’t expect the share price to return to $40 in October. Instead, be realistic and look toward $25 and $30 as the next price objectives.
The Clientele Is Ready
So, is there an audience ready and waiting for an opportunity to fly into space? This is a valid question because the ticket price at Virgin Galactic is a lofty $250,000. And frankly, not everyone has disposable income of that magnitude.
Still, even amid a global pandemic, there are individuals who can afford to book a flight into space at Virgin Galactic. Furthermore, many of these individuals are willing to pay the high ticket price. In fact, a survey conducted by Cowen found that more than one-third of high-net-worth individuals would be interested in paying for a flight with Virgin Galactic.
Regarding this, Cowen analyst Oliver Chen reported, “Cowen’s proprietary survey highlights a high level of interest among high-net-worth individuals to fly to space at a ticket price of $250k or above.”
On top of that, Cowen found that among individuals with a net worth exceeding $5 million, there’s a total addressable market of roughly 2.4 million people for Virgin Galactic’s suborbital flights.
Analysts Weigh In
So, evidently the clientele is there. But are Wall Street’s financial experts on board with Virgin Galactic?
There is evidence that prominent analysts are, one by one, joining the bull camp. For instance, Vertical Research Partners analyst Darryl Genovesi assigned SPCE stock a “buy” rating along with an ambitious price target of $29.
Meanwhile, Cowen analyst Oliver Chen initiated his coverage of SPCE stock with a “buy” rating and assigned it a $22 price target. Apparently, Chen agrees with me that Virgin Galactic “is uniquely positioned to benefit from the growing consumer interest toward luxury experiences, especially among high-net-worth individuals.”
Then there’s Credit Suisse analyst Robert Spingarn, whose firm upgraded SPCE stock from “hold” to “buy.” Spingarn hiked his price target on the stock from $22 to $24.
Moreover, we can add UBS analyst Myles Walton to the bull list. Walton initiated coverage of SPCE stock with a “buy” rating and assigned it a price target of $25.
The Bottom Line
Frankly, there’s are many options out there for investors seeking a pure play in space tourism. SPCE stock is the way to go because the share price has room to run and the addressable market is ready and waiting.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.