Can Virgin Galactic Stock More Than Double from Here?
Shares of Virgin Galactic Holdings (SPCE) have taken shareholders on a roller-coaster ride in the last few years. The stock rocketed all the way from $7.29 in December 2019 to more than $50 in June 2021. Today, Virgin Galactic stock is priced at $2.04, valuing the company at $767 million by market cap. Let’s see if the space tech stock can stage a comeback this year.
Is Virgin Galactic Stock a Good Buy Right Now?
Virgin Galactic is an aerospace and space travel company that is developing a spaceflight system to offer customers a transformative experience.
In Q3 of 2023, Virgin Galactic reported revenue of $1.7 million, up from just $800,000 in the year-ago quarter. The uptick in sales was driven by commercial spaceflight and membership fees. Virgin Galactic successfully completed six spaceflights in under six months and is on track to end the year with total sales of $7 million, up from $2.31 million in 2022.
With $1.1 billion in balance sheet cash, Virgin Galactic is looking to lower operating costs to navigate a challenging macro environment. The company has restructured its workforce and deployed significant resources to develop a line of Delta Class spaceships.
It reported a net loss of $104.6 million in Q3 and estimates cash outflows of $135 million in Q4. This suggests Virgin Galactic has significant room to burn cash before reporting consistent profits. In fact, the company emphasized it has enough liquidity to bring its first two Delta ships into service and achieve a positive cash flow in 2026.
Can Virgin Galactic Stock Skyrocket in 2024?
Virgin Galactic aims to gain traction in the space travel business by transporting people beyond the planet’s atmosphere. Last May, it successfully completed a test flight, and then launched a commercial flight in late June.
It then began to launch one flight every month, increasing its operating expenses to $25.6 million in the September quarter. To reduce its operating costs, Virgin Galactic will have to successfully develop and manufacture Delta ships, a next-generation spacecraft. The Delta ship is much larger than current spacecrafts, and can generate additional revenue on a per-flight basis.
Further, Virgin Galactic will also reduce its research and development (R&D) costs once the Delta ships are manufactured and deployed. In Q3, Virgin Galactic spent $45 million in research and development, which was 7.5x its sales.
What's the Target Price for Virgin Galactic Stock?
Analysts tracking SPCE stock expect sales to rise from $2.31 million in 2022 to $11.42 million in 2024. Its loss per share is forecast to narrow from $1.89 per share to $1.12 per share in this period.
Out of the nine analysts covering SPCE, two recommend “strong buy,” three recommend “hold,” two recommend “moderate sell,” and two recommend “strong sell.”
The average price target for SPCE stock is $2.88, indicating an upside potential of over 40%. The Street-high target, meanwhile, is $5.00 - a premium of 143% to current levels.
All things considered, Virgin Galactic stock is a high-risk bet, given its operating losses and lofty valuation.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.
