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Is Virgin Galactic Stock a Buy Right Now? This Is What You Need to Know
Stock Analysis & Ideas

Is Virgin Galactic Stock a Buy Right Now? This Is What You Need to Know

Space tourism is now closer than ever. Last week, Virgin Galactic (SPCE) announced it had received the FAA’s (Federal Aviation Administration) nod of approval to take passengers into space.

The full commercial license was granted after a test flight of the VSS Unity on May 22 met all the required criteria – including the correct functioning of the spaceplane’s upgraded horizontal stabilizers, flight controls and EMI shielding.

The VSS Unity reached a top speed of Mach 3 during the flight, and attained an apogee of 55.5 miles – far above the 50-miles the US considers the edge of space.

The full commercial service is expected to kick into action in 1Q22, but it’s not only the conquering of space which is on the agenda, but some of this world’s richest inhabitants are to be considered here.  

Canaccord’s Kenneth Herbert thinks space tourism might be brought forward so Virgin founder Richard Branson can get one up over Jeff Bezos. Bezos owned Blue Origin’s New Shepard is slated for a July 20 spaceflight with its first passenger onboard – the recent seat auction’s winning bidder – who will join the Amazon founder and his brother.

Not so fast, says Virgin Galactic, with the rumor mill suggesting the Unity’s next July 4 test flight will have Branson on board so he can make it ahead of Bezos “to the Final Frontier.”

“It is not inconceivable that passengers may be given the opportunity to cash in their $250k deposit during that flight to enable Virgin Galactic to emerge as the winner of the commercial (suborbital) space race,” the 5-star analyst opined.

SPCE stock understandably surged on the news and Hebert expects the shares will continue to be “catalyst-driven,” of which there should be a few on the horizon.  

Herbert counts the “completion of the remaining three test flights, the re-opening of the sales process, and even the anticipated launch of the competitor Blue Origin’s New Shepard space capsule on July 20,” as ones to look out for in the near-term.

Overall, SPCE stock presents a bit of a conundrum. Based on 5 Buys and Holds, each, the stock has a Moderate Buy consensus rating. However, somewhat confusingly, the shares are expected to come crashing down to earth; the $29.4 average price target implies 46% downside in the year ahead.

It will be interesting to see whether the analysts downgrade their ratings or upgrade price targets over the coming months. (See SPCE stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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