INTERNATIONAL – Virgin Galactic Holdings surged the most in more than five months on Monday after analysts turned bullish on the aerospace company partly by its potential to tap into unprecedented demand for space tourism.
Bank of America Global Research and Susquehanna Financial Group on Monday both initiated coverage of the company founded by Richard Branson with buy-equivalent ratings. The stock was among the most actively-traded securities of the day.
Shares of Virgin Galactic rose as much as 23 percent to $20.27 (R347.84) in New York trading, the highest in almost eight weeks. They have advanced 72 percent this year.
Bank of America analyst Ronald Epstein set a $35 price target, more than double Virgin Galactic’s closing price on Friday. He said that while the company isn’t yet operational, it’s unique because it has nearly full vertical integration by building, assembling and operating aircraft.
Along with plans to start serving customers early next year, Epstein said the company’s growth potential is “unparalleled.” Still it faces risks, with only two completed missions to space so far, and any setbacks or accidents could compromise the business model.
Susquehanna analyst Charles Minervino called the company an “innovator” of space technology with a “truly unique offering” for users to access space for entertainment and research purposes. He set a $20 price target and said that with the company in its early stages, he doesn’t see positive earnings until 2023 or free cash flow until 2024, “which serves as a fundamental risk.”
Earlier this month, Credit Suisse reinstated coverage of Virgin Galactic with an outperform rating on prospects for its first commercial sub-orbital flight next year.