Credit Suisse upgrades Virgin Galactic

(Seeking Alpha) – Credit Suisse resumes coverage on Virgin Galactic (NYSE:SPCE) with an Outperform rating and price target of $24.

“We now know to expect two more test flights, both powered, one with two pilots and the second with a full crew. Since these two flights (expected during Q4 and early Q1) are intended to complete the full sub-orbital mission, their achievement should be significant positive catalysts for re-rating,” writes analyst Robert Spingam.

It is also noted that investors will not want to be on the sidelines for the eventual Richard Branson flight.

CS also has a Blue Sky scenario on SPCE. “Our blue sky scenario assumes revenue 20% higher than our base case, driven by higher than expected ticket prices. This results in full flowthrough to EBITDA, driving EBITDA of $381m. We apply a 38x EV/EBITDA multiple, a 20% premium to the comp set (TIF, RACE, TSLA). This results in our blue sky valuation of $43,” reads the bullish summary.

Shares of Virgin Galactic are up 3.56% in premarket action to $18.02. The space tourism stock has been pretty volatile since debuting last year.


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