Credit Suisse began coverage of Virgin Galactic with an outperform rating Thursday, saying in an a note titled "The Ultimate Joyride" that the firm sees multiple factors driving the space tourism stock higher.
"Our bullish view reflects the near-term monopoly SPCE offers in an industry (commercial space tourism) where public investment opportunities are scarce. We view this as a classic tech-driven high demand, low supply story with high barriers to entry," Credit Suisse analyst Robert Spingarn wrote in a note to investors. "Not everyone will see the value, but we believe the math works nonetheless."
Virgin Galactic shares rose in premarket but later dropped, closing down 7.4% at$9.10. Credit Suisse has a $12.43 price target on the stock, essentially seeing 36% upside over the next year. The firm is the second to begin covering Virgin Galactic with a buy recommendation: Vertical Research Partners is also bullish on the opportunity.
The stock has slid since its public debut last month, down about 20%, but that doesn't worry Virgin Galactic Chairman Chamath Palihapitiya. He expects Virgin Galactic to begin flying its first customers as early as May, saying on Wednesday that flights "will begin in about six to nine months."
"I think the story of Virgin is just so new that it hasn't been written yet. We'll start commercial operations in the middle of next year, so the full-fledged business value will become apparent very quickly to a lot more people at that point," Palihapitiya said in an interview with CNBC's Seema Mody on "Closing Bell."
Credit Suisse agrees, saying the stock's upside largely depends on how closely Virgin Galactic sticks to its schedule and begins flying people.
"We believe the greatest single catalyst would be successful completion of the first commercial flight," Spingarn said. "From here, losses should dissipate rapidly as flight activity rises."
Virgin Galactic spacecraft Unity fires its engine and heads to space with its first test passenger on board in February 2019.
Virgin Galactic | gif by @thesheetztweetz | CNBC
At $250,000 per person, Virgin Galactic's ticket revenue is about three times the cost of each flight, Credit Suisse noted, "which would drive very attractive incremental margins." The company's spacecraft holds up to six passengers along with the two pilots.
Spingarn says Virgin Galactic "has a distinct first-to-market advantage" in space tourism, estimating nearest competitor Blue Origin is at least two years behind. And even when Blue Origin does start flying people, the company is inaccessible to public investors as it is wholly owned and funded by Jeff Bezos.
Credit Suisse also mentions SpaceX, with its fully reusable Starship rocket, as a long-term threat to Virgin Galactic's business.
"While SpaceX does not appear to be as focused on space tourism, a point-to-point solution serviced by Starship could convert space travel from a novelty experience to a commodity service," Spingarn said.
Virgin Galactic is thinking about the potential of high-speed, long distance travel, also known as point-to-point space travel. Boeing's venture arm HorizonX last month invested $20 million into Virgin Galactic to explore developing a vehicle capable of flying around the world at hypersonic speeds. But SpaceX is a notable risk to Virgin Galactic's future business, Credit Suisse said.
"Unless Virgin is able to offer a similarly compelling point-to-point solution, the arrival of point-to-point by competitors could damage the overall [total addressable market] for space tourism and, therefore, the long-term demand profile," Spingarn said.
Finally, Credit Suisse warns that any major accident or malfunction would likely substantially slow Virgin Galactic's business. In 2014, an accident during a Virgin Galactic test flight killed a co-pilot.
"We assign a $0 value in the case of a catastrophic event (e.g., a fatal crash)," Spingarn said.
Original post:
Credit Suisse says to buy Virgin Galactic stock for its 'near-term monopoly' on space tourism - CNBC
- A Real Life Hibernation Chamber is Being Made For Deep Space Travel - Futurism - February 7th, 2017 [February 7th, 2017]
- Humans to be FROZEN IN TIME for space travel as scientists move to COLONISE other planets - Express.co.uk - February 7th, 2017 [February 7th, 2017]
- Space flight changes astronauts' brains, research reveals - Fox News - February 7th, 2017 [February 7th, 2017]
- Space travel changes DNA, study finds - STLtoday.com - February 7th, 2017 [February 7th, 2017]
- Space travel visionaries solve the problem of interstellar slowdown ... - Science Daily - February 7th, 2017 [February 7th, 2017]
- Quantum Entanglement May Be Key To Long Distance Space Travel Ex Lockheed Exec Said It's Already Happening - Collective Evolution - February 7th, 2017 [February 7th, 2017]
- Is This Buzz Aldrin-Inspired Locomotive The Future Of Space Travel? - Forbes - February 7th, 2017 [February 7th, 2017]
- Celestial bodies: The Kelly twins offer a vital sign for space travel ... - Pittsburgh Post-Gazette - February 7th, 2017 [February 7th, 2017]
- Space travel visionaries solve the problem of interstellar slowdown at Alpha Centauri - Phys.Org - February 7th, 2017 [February 7th, 2017]
- Newspaper review: Heartthrob and space travel in Wednesday's papers - BBC News - February 8th, 2017 [February 8th, 2017]
- Another View: NASA's Twins Study offers vital sign for space travel - Press Herald - February 8th, 2017 [February 8th, 2017]
- Piece of tragic shuttle history gets a second chance at space travel - WQAD.com - February 9th, 2017 [February 9th, 2017]
- Meet Shawn Pandya, The Third Indian-Origin Woman To Space-Travel - Huffington Post India - February 9th, 2017 [February 9th, 2017]
- Shawna Pandya clears the air on rumours of space travel - Daily News & Analysis - February 10th, 2017 [February 10th, 2017]
- The Expanse and Frankie Adams: Meet the Kiwi who's conquered space travel - Stuff.co.nz - February 10th, 2017 [February 10th, 2017]
- Did a CSU study find that space travel makes you younger? Not so ... - The Denver Post - February 10th, 2017 [February 10th, 2017]
- Twins study offers valuable data on space travel - Herald-Whig - - Herald-Whig - February 10th, 2017 [February 10th, 2017]
- The Expanse and Frankie Adams: Meet the Kiwi who's conquered space travel - Waikato Times - February 11th, 2017 [February 11th, 2017]
- Kelly twins offer a vital sign for space travel - San Angelo Standard Times - February 11th, 2017 [February 11th, 2017]
- Lacoste delves into the world of space travel at New York Fashion Week as Baptista honours founder's lesser-known ... - Evening Standard - February 11th, 2017 [February 11th, 2017]
- NASA's Irish Twins Study reveals first results of space travel on humans - IrishCentral - February 12th, 2017 [February 12th, 2017]
- Starbound to revamp space travel in future update - PC Gamer - February 12th, 2017 [February 12th, 2017]
- How Does Long-Term Space Travel Affect Humans? - Voice of America - February 13th, 2017 [February 13th, 2017]
- A VR Company is Attempting to Make Holographic Videos for Space Travel - Mobile Magazine - February 15th, 2017 [February 15th, 2017]
- Two-Time Space Traveling Astronaut to Speak at Black History ... - Patriots Point - February 16th, 2017 [February 16th, 2017]
- Make space travel great again: NASA, heeding Trump, may add astronauts to a test flight moon mission - National Post - February 16th, 2017 [February 16th, 2017]
- In recently unearthed essay, Winston Churchill anticipated space travel and extraterrestrial life - The Providence Journal - February 16th, 2017 [February 16th, 2017]
- Twins in space: intergalactic travel could change DNA - The Student - February 17th, 2017 [February 17th, 2017]
- An unearthed essay reveals Winston Churchill anticipated space travel and aliens - Stuff.co.nz - February 17th, 2017 [February 17th, 2017]
- Focus Friday: The necessity of space travel - The Daily Cougar - February 17th, 2017 [February 17th, 2017]
- NASA announces $2m investment on technology advancement for deep space travel - WDSU New Orleans - February 17th, 2017 [February 17th, 2017]
- Focus Friday: The necessity of space travel - The Daily Cougar - The Daily Cougar - February 18th, 2017 [February 18th, 2017]
- Ask Ethan: How Can I Travel Through Space Without Getting Into Trouble? - Forbes - February 18th, 2017 [February 18th, 2017]
- Do You Have The Right Personality For Long-Term Space Travel ... - Seeker - February 18th, 2017 [February 18th, 2017]
- In recently unearthed essay, Winston Churchill anticipated space travel and extraterrestrial life - Washington Post - February 18th, 2017 [February 18th, 2017]
- UK bids to be world leader in Space travel by 2020 - Daily Star - February 20th, 2017 [February 20th, 2017]
- Know before you fly: privatized space travel - Observer Online - February 21st, 2017 [February 21st, 2017]
- You could fly to SPACE from the UK within three years as plans are for space port are unveiled - The Sun - February 21st, 2017 [February 21st, 2017]
- Cosmic cinema: spurring interest in real-life space travel? - Miami Student - February 22nd, 2017 [February 22nd, 2017]
- Commercial space travel could be ready as early as 2020 - New York Post - February 22nd, 2017 [February 22nd, 2017]
- This Finnish startup democratizes space travel and it just raised over 3 million to find the next 'Slumdog ... - Business Insider Nordic - February 23rd, 2017 [February 23rd, 2017]
- Commercial space travel WITHIN THREE YEARS on flights to launch from BRITAIN - Express.co.uk - February 23rd, 2017 [February 23rd, 2017]
- Katherine Johnson led African American efforts in space travel - Farm and Dairy - February 23rd, 2017 [February 23rd, 2017]
- Space travel is measured in light years, but what's a light year anyway? - MyStatesman.com - February 23rd, 2017 [February 23rd, 2017]
- TRAPPIST-1: How Long Would It Take to Fly to 7-Planet System? - Space.com - February 24th, 2017 [February 24th, 2017]
- NASA Looking for Bright Ideas to Help With Space Travel - Tech.Co - February 24th, 2017 [February 24th, 2017]
- The history of space travel encapsulated - Fairfaxtimes.com - February 25th, 2017 [February 25th, 2017]
- SpaceX's reusable rockets make space travel much cheaper - The ... - CMU The Tartan Online - February 27th, 2017 [February 27th, 2017]
- Stars align for space travel at memorable Oscars ceremony - Siliconrepublic.com - February 28th, 2017 [February 28th, 2017]
- FSU researcher to lead US-Russia project on health, space travel - Florida State News - February 28th, 2017 [February 28th, 2017]
- Crowding the cosmos: space travel turns private - The Student - March 1st, 2017 [March 1st, 2017]
- Forget SpaceX: 10 companies that will change space travel in 2017 & 2018 - Geektime - March 2nd, 2017 [March 2nd, 2017]
- Safe space travel: Protecting alien worlds from earthlings - and vice versa - Deutsche Welle - March 2nd, 2017 [March 2nd, 2017]
- Watch: 'Black Holes' A Satirical Comedy About Space Travel From Sundance 2017 - Konbini US - March 3rd, 2017 [March 3rd, 2017]
- Doctor Launches Vision Quest To Help Astronauts' Eyeballs - NPR - March 4th, 2017 [March 4th, 2017]
- Beyond Earth talking about space travel - Alaska Public Radio Network - March 4th, 2017 [March 4th, 2017]
- Would You Book A Flight To The Moon? - The Alternative Daily (blog) - March 6th, 2017 [March 6th, 2017]
- Colorado Likely To Benefit From Privatized Space Travel - CBS Local - March 6th, 2017 [March 6th, 2017]
- NEC develops reliable FPGAs for space travel - Electronics Weekly - Electronics Weekly - March 8th, 2017 [March 8th, 2017]
- 4 Entrepreneurs Changing the Way We Think About Space Travel - Tech.Co - March 9th, 2017 [March 9th, 2017]
- Why Space Travel Can Be Absolutely Disgusting - Live Science - March 9th, 2017 [March 9th, 2017]
- EDITORIAL: Exploring private space travel - Indiana Daily Student - March 11th, 2017 [March 11th, 2017]
- Harvard Scientists Theorize That Fast Radio Bursts Come From Alien Space Travel - Popular Mechanics - March 11th, 2017 [March 11th, 2017]
- Space Exploration: US congress approves $19.5 billion for NASA to get humans to Mars by 2033 - NTA News - March 11th, 2017 [March 11th, 2017]
- MIT Conference To Focus On Space Travel For The Public - CBS Boston / WBZ - March 11th, 2017 [March 11th, 2017]
- Reusing rockets is best way to advance space travel, SpaceX officer tells symposium attendees - Colorado Springs Gazette - April 8th, 2017 [April 8th, 2017]
- How space travel leads to cognitive shifts in awareness | Life and ... - The Guardian - April 8th, 2017 [April 8th, 2017]
- Cheap space travel, electric cars and a whirlwind love life love life... the billionaire genius inventing our future - Mirror.co.uk - April 8th, 2017 [April 8th, 2017]
- Reusable rockets key for space travel industry - Alamogordo Daily News - April 8th, 2017 [April 8th, 2017]
- Is this massive airplane the future of space travel? One billionaire thinks so. - SOFREP (press release) (subscription) - June 6th, 2017 [June 6th, 2017]
- spotlight - NYCAviation - June 6th, 2017 [June 6th, 2017]
- BBC commissions documentary about commercial space travel fronted by Brian Cox - Radio Times - June 6th, 2017 [June 6th, 2017]
- The Physics of Interstellar Travel : Explorations in ... - June 6th, 2017 [June 6th, 2017]
- Mars rover scientist, SpaceX engineer join NASA astronaut corps - Reuters - June 7th, 2017 [June 7th, 2017]
- How SpaceX Launched a Chinese Experiment Into Space, Despite US Ban - Foreign Policy (blog) - June 7th, 2017 [June 7th, 2017]
- 'Blast Camp' gives students lessons on space travel - Fremont News Messenger - June 7th, 2017 [June 7th, 2017]
- IKEA looks to space travel for new micro-living furniture collection - Dezeen - June 7th, 2017 [June 7th, 2017]
- HPE's next frontier: Space travel & memory-driven computing - IT Brief Australia - June 8th, 2017 [June 8th, 2017]
- 20 Out-Of-This-World Companies Working On Space Travel Technologies - Interesting Engineering - June 12th, 2017 [June 12th, 2017]
- Here's how space travel is helping keep you healthy - Eyewitness News - June 12th, 2017 [June 12th, 2017]