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Virgin Galactic 'leader' of a future billion-dollar space-tourism market

By Claudia Assis

Canaccord's Ken Herbert initiates coverage of Virgin Galactic stock with a buy rating

Virgin Galactic Holdings Inc. is ready to reap the benefits of a soon-to-be $8 billion market with not much competition yet for high-profile space-tourism travel.

That's from Ken Herbert at Canaccord, who on Wednesday initiated coverage of Virgin Galactic's stock (SPCE) at a buy with a price target of $35, implying an upside of 30% from current prices.

See also:Virgin Galactic's 'major milestone' space flight boosts stock to best in 6 weeks (link)

Space tourism will possibly be an $8 billion market by 2030, Herbert said in a note.

"While competition from Blue Origin and others is accelerating, we believe the industry will be supply-constrained for the next several years," he said.

Blue Origin (link) was founded by Amazon.com Inc. (AMZN) Chief Executive Jeff Bezos.

Virgin has raked in the benefits of Saturday's first successful rocket-powered flight to the fringe of space in a manned shuttle, which put the company closer to its goal of offering space-tourism flights. The stock is up nearly 30% in the week.

Don't miss: Virgin Galactic's 'major milestone' space flight boosts stock to best in 6 weeks (link).

The company has 600 reservations, and the overall addressable market is estimated to be around 1 million people.

"Our revenue model assumes (about) 14,000 passengers over the next 10 years," Herbert wrote, with Virgin Galactic reaching about $1.7 billion in annual revenue in 2030), which represents around 20% of the addressable market, he said.

Virgin shares have gained 66% in the last 12 months and 14% this year, compared with advances of 40% and 12% for the S&P 500 index in these same periods.

-Claudia Assis; 415-439-6400; AskNewswires@dowjones.com

 

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05-26-21 1121ET

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