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Astra Space vs. Virgin Galactic: Which Stock Will Take Flight?

Aerospace companies are getting closer to commercializing space travel. The recent successful test flights by Sir Richard Branson’s Virgin Galactic and Amazon founder Jeff Bezos’ Blue Origin have sparked keen interest among investors in Aerospace stocks.

Using the TipRanks Stock Comparison tool, let us compare two companies in the space sector, Astra Space, and Virgin Galactic, and see how Wall Street analysts feel about these stocks.

Astra Space (ASTR)

Astra Space aims to produce an orbital launch system that would consist of a “small launch vehicle and mobile ground infrastructure that can fit inside standard shipping containers for rapid deployment anywhere in the world.”

The payload capacity of the company’s rockets looks at fulfilling the needs of Low Earth Orbit (LEO) satellite constellations.

The company was created through a merger with Special Purpose Acquisition Company (SPAC) Holicity and went public earlier this year.

Yesterday, Astra Space stock shot up 11.7% as the company announced the commercial orbital launch of its vehicle, LV0007, which will carry a test payload for the United States Space Force’s Space Test Program.

ASTR also announced the reasons behind the aborted test launch of its launch vehicle, LV0006, in August. The company stated that during liftoff, fuel and liquid oxygen leaked from the propellant supply system attached to the LV0006.”

As a result, the company has made some design changes to LV0007. ASTR will also continue to collaborate with the Federal Aviation Administration (FAA) when it comes to the LV0006 investigation.

The aborted LV0006 launch was a setback for the company and has resulted in the stock tanking 9.1% in the past month, and 28.8% in the past three months. (See Analysts’ Top Stocks on TipRanks)

Around two days back, Deutsche Bank analyst Edison Yu added Astra to the Catalyst Call Buy list over the short term and pointed out that the fall in the stock price “offers compelling risk/reward over the next few weeks as there could be 2 – 3 potentially positive events that occur.”

The analyst has a price target of $13 (55.1% upside) on the stock.

Yu pointed out two key catalysts for the stock. The analyst expects the findings from the LV0006 investigation to indicate that the issues were “relatively minor, paving the way for 2 more launches before year-end.”

Moreover, Yu also pointed out that going by the FAA’s temporary flight restriction (TFR) for Kodiak, Alaska, Astra was possibly considering its next rocket launch in the window between October 19 and October 29, as it is the only company operating from that site.

The analyst added, “assuming this is indeed Astra’s launch window, the actual mission would serve as third catalyst, if successful.”

Astra’s launch window for the LV0007 will be divided into two segments; the first segment will be open from October 27 through October 31, and the second segment will be open from November 5 through November 12.

Turning to the rest of the Street, Wall Street analysts remain sidelined about Astra Space, with a Hold consensus rating based on 1 Buy and 1 Sell.

The average Astra Space price target of $11 implies 31.3% upside potential from current levels.

Virgin Galactic (SPCE)

Virgin Galactic is a vertically integrated aerospace company that is looking at the commercial exploration of space. The company’s operations include the manufacturing, design and development, ground and flight testing, and post-flight maintenance of its spaceflight system vehicles.

In July, the company successfully completed its 22nd test flight of the VSS Unity and the first with a full crew on board, including Sir Richard Branson, the company’s founder.

However, the success of this flight was marred by an FAA inquiry. The FAA determined that the VSS Unity had deviated from its designated airspace for 1 minute and 41 seconds and had failed to report the error. But late last month, the FAA cleared the company to fly FAA-licensed spaceflights after the conclusion of an inquiry into real-time mission notifications and air traffic control clearance.

The FAA also accepted certain corrective actions proposed by Virgin Galactic which include “updated calculations to expand the protected airspace for future flights,” and additional steps to “ensure real-time mission notifications to FAA Air Traffic Control.” (See Insiders’ Hot Stocks on TipRanks)

SPCE is now planning a “Unity 23” commercial research mission that will consist of crew members from the Italian Air Force and the National Research Council. This research mission will study the effects of “the transitional phase from gravity to microgravity on the human body.”

However, this mission hit a snag last month while during preparation for the Unity 23 flight, a third-party supplier flagged “a potential manufacturing defect in a component of the flight control actuation system that they supply to Virgin Galactic.”

As a result, the company is conducting inspections together with the vendor and said last month that it expected to open the flight window for the Unity 23 in mid-October.

Following the setback, Jeffries analyst Greg Konrad told investors that he believed these were “near-term challenges” related to timing and would not change the revenue trajectory for the company.

Moreover, the analyst added, “The events are also independent of the ramp of the Delta class design and production, key to providing capacity to support growing demand.”

The company’s management stated on its Q2 earnings call that it was focused on building its Delta class vehicles, a “fleet of production spaceships.”

The analyst is bullish on the stock as he is of the opinion that “commercial space tourism will be a flourishing industry, unlocking profitability and cash flow for Virgin Galactic.” Konrad has a Buy rating on the stock and a price target of $33 (40.4% upside potential).

Turning to the rest of the Street, Wall Street analysts remain sidelined about Virgin Galactic, with a Hold consensus rating based on 3 Buys, 4 Holds, and 2 Sells.

The average Virgin Galactic price target of $30.78 implies 30.9% upside potential from current levels.

Bottom Line

While analysts are sidelined about both stocks, it remains to be seen how these stocks will fare in the long run. ASTR’s future success depends on the successful launch of the LV0007.

In contrast, while SPCE has already had its first successful commercial space flight, analysts seem to be in a wait-and-watch mode when it comes to its Unity 23 flight.

Disclosure: At the time of publication, Shrilekha Pethe did not have a position in any of the securities mentioned in this article​.

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