Virgin Galactic Stock Price Forecast September 2021 – Time to Buy SPCE?

Virgin Galactic (SPCE) stock fell almost 3% yesterday which narrowed its 2021 gains to 12%. The stock is underperforming the S&P 500 and trades at a discount of 59% to the 52-week highs – even as the US stock markets are trading at all-time highs.

What’s the forecast for SPCE stock and is the massive fall in the stock a buying opportunity for investors?

Virgin Galactic recent developments

Earlier this year, the company made a successful flight with Sir Richard Branson on board. Branson earned the distinction of becoming the first billionaire to reach space ahead of Jeff Bezos. Tesla’s CEO Elon Musk is the other major billionaire betting on space travel.

Meanwhile, yesterday, the US Federal Aviation Administration (FAA) grounded Virgin Galactic as it is investigating the flight that carried Branson to space. “The FAA is responsible for protecting the public during commercial space transportation launch and reentry operations. The FAA is overseeing the Virgin Galactic investigation of its July 11 SpaceShipTwo mishap that occurred over Spaceport America, New Mexico. SpaceShipTwo deviated from its Air Traffic Control clearance as it returned to Spaceport America,” said FAA in its statement.

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SPCE stock price tumbled

SPCE stock was trading in the green yesterday but turned negative after the news. The spaceflight had briefly gone off trajectory which the FAA has confirmed.  In its statement to CNBC, FAA said “Virgin Galactic may not return the SpaceShipTwo vehicle to flight until the FAA approves the final mishap investigation report or determines the issues related to the mishap do not affect public safety.”

The New Yorker had raised concern over the safety of the flight. While SPCE acknowledged that the flight went off trajectory briefly, it clarified “At no time were passengers and crew put in any danger as a result of this change in trajectory.”

The FAA investigation could be an overhang for Virgin Galactic stock and an adverse report could negatively impact the stock.

Virgin Galactic stock price

Virgin Galactic went public in 2019 through a reverse merger with a SPAC (special purpose acquisition company) backed by “king of SPACs” Chamath Palihapitiya. It was the first SPAC from his Social Capital and later he took several other companies public.

SPCE stock hit an all-time high of $62.80 earlier this year. The stock has however gone through the boom-bust cycle twice this year. It had surged in the first quarter amid buying interest from Reddit traders but soon pared gains. The stock had surged in July ahead of Branson’s flight but tumbled despite the successful flight.

The company announced a $500 million share sale after the test flight in an apparent bid to capitalize on the surge in its stock.

SPCE stock price forecast

Of the 11 analysts covering SPCE stock, four have a buy rating while five rate them as a hold. The remaining two analysts rate it as a sell. Wall Street analysts have had a mixed opinion over the stock after the space flight. After the flight, Bank of America had downgraded the stock and lowered the target price to $41 which it later toned down even further to $25

However, earlier this week, Jefferies initiated coverage with a buy rating and a $33 target price. “The business model is simple; more customers + more spaceships to meet demand drives topline growth,” said Jefferies analyst Greg Konrad in his note. He expects the market potential for space travel at $120 billion and predicts that SPCE will be able to generate revenues of $440 million by 2025.

Credit Suisse downgraded Virgin Galactic stock

Credit Suisse also recently downgraded Virgin Galactic stock and lowered the target price to $30. “Our prior Outperform rating was predicated upon catalysts such as the Branson flight and the start of commercial operations. However, with the former completed and the latter delayed to Q4′22 [Credit Suisse estimate] due to an extended maintenance and enhancement period, the catalyst path in the next 12 months is less robust,” it said in its note.

SPCE stock price long-term forecast

Meanwhile, looking at the long-term picture, the outlook for space travel looks positive. Virgin Galactic has already taken the first-mover advantage and its association with Branson, which has expertise in the aviation industry, is another added advantage. Virgin Galactic believes that the space travel market is worth $900 billion. It intends to focus on the top end of the market which it predicts is about a third of the total market.

That’s a massive market opportunity for the company considering its current market cap of around $7 billion.

Virgin Galactic technical analysis

Looking at the technicals, Virgin Galactic stock trades below the 50-day, 100-day, and 200-day SMA (simple moving average). The stock needs to rise above these price levels to signal an uptrend.

Meanwhile, if you are looking at a way to play the expected boom in space travel, SPCE stock looks like among the best bets. While there would be near term hiccups and volatility, the stock could be a multibagger if the space travel market gains traction.

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