Virgin Galactic Holdings Inc (NYSE: SPCE) shares jumped close to 10% on Tuesday morning as Jefferies assumed coverage of the stock with a ‘buy’ rating. Analyst Greg Konrad expressed confidence in the future of space tourism as he disclosed his price target of $33 on SPCE that translates to a roughly 30% upside from here.
Virgin Galactic could see 660 flights per year
In a note to clients this morning, Konrad said Virgin Galactic could be a $1.7 billion revenue company by 2030. He expects the space tourism firm to see 660 flights per year by the end of the decade, with 250K travellers at a ticket price of $450K.
“Concrete plans on ramping of the Delta class spaceship adding capacity – current capacity is ~36 flights/year w/ each Delta adding ~50 flights/year. The risk is that the ramp in revenue/profitability is likely in the 2024/2025 time period w/2022 revenues and EBITDA projected at $18MM and ($215MM). NT catalysts add to visibility rather than converting immediately to cash,” he added.
Currently, Virgin Galactic has a backlog of about 600 customers. Konrad’s estimate for the valuation of the space tourism industry at large stands at $120 billion.
Virgin Galactic will have four spaceships by 2025
According to the analyst, Sir Richard Branson’s company has a “simple business model” that focuses on building spaceships to meet the rising demand. By 2025, he predicts, Virgin Galactic will have four spaceships, generating close to $442 million in revenue.
“Virgin has built a scalable platform w/reusable technology pointing to high contribution margins. Virgin lost $232MM in 2020, which falls modestly to $221MM in 2021. As revenues ramp, assuming 960 passengers in 2025 on doubling of spaceships, we see a path to 28% EBITDA margin. There is potential to rise to ~50% over the next ten years based on capacity growing 3.5X from 2025 to 2030,” Konrad wrote.
Earlier this month, Richard Branson sold a part of his Virgin Galactic stake worth $300 million.
The post Jefferies’ Konrad sees an about 30% upside in Virgin Galactic stock appeared first on Invezz.
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