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Virgin Galactic: What Next Following FAA Clearance? Analyst Weighs In
Stock Analysis & Ideas

Virgin Galactic: What Next Following FAA Clearance? Analyst Weighs In

Richard Branson’s space tourism plans can continue apace, following the closing of an FAA (Federal Aviation Administration) inquiry. Virgin Galactic (SPCE) has now been given the all clear from the FAA to resume FAA-licensed spaceflights, after the conclusion of a probe in to why the Unity 22 veered off its designated flight path for 1 minute and 41 seconds during its July 11 flight.

Following acceptable proposed corrective actions, the inquiry has now been closed. Measures to be taken include expanding future flights’ protected airspace and guaranteeing FAA Air Traffic Control receives real-time mission notifications.

“In our view,” said Jefferies’ Greg Konrad, “The announcement lifts an overhang for SPCE, with focus shifting to Unity 23.”

The Unity 23 was slated for a late September/early October flight, however, due to a potential manufacturing defect, the commercial research mission with the Italian Air Force has been pushed back to mid-October at the earliest. Inspections are ongoing, and it has yet to be determined whether a spacecraft’s component is defective and if so, whether any repair work may be needed.

These “near-term challenges,” says Konrad, are “timing-related” and have no impact on the “trajectory of the revenue profile.”

Schedule wise, there are several catalysts lined up. Following the Unity 23’s flight, the Unity 24 should take off in 3Q22, its mission being to “validate enhancements” of the carrier mothership EVE. Then, officially marking the beginning of commercial services, the Unity 25 should take to space in late 3Q22.

Overall, Konrad sees a bright future for Virgin Galactic and its revolutionary industry.

“We continue to believe that commercial space tourism will be a flourishing industry, unlocking profitability and cash flow for Virgin Galactic,” the analyst summed up.

Accordingly, Konrad reiterated a Buy rating, backed by a $33 price target. Investors stand to score a 29% gain, should Konrad’s thesis go according to plan in the year ahead. (To watch Konrad’s track record, click here)

However, not all on the Street are quite as confident. Based on 4 Buys, 5 Holds and 2 Sells, SPCE stock has a Hold consensus rating. However, the average price target remains a bullish one; at $31.3, the figure is set to reward investors with returns of 21% over the coming months. (See SPCE stock analysis on TipRanks)

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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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