Can the Virgin Galactic share price take off again?

Virgin Galactic shares surged more than 200% at the start of the year, though those gains were destroyed by the coronavirus pandemic in mid-February. But will the stock take flight again?

Well, the stock appears to have bottomed out at $10.49 a share last week, with Virgin Galactic seeing its shares climb $7 to trade at $17.80 a share as of 14:25 (GMT) on Thursday, representing a 66% increase.

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Morgan Stanley optimistic but realistic

The uptick in its price may have something to do with Morgan Stanley analyst Adam Jonas, who upgraded his rating for the stock to ‘buy’ earlier this week, believing that the spaceflight company will see its shares fly higher this year.

But despite his optimism, Jonas slashed his target price for the stock from to $24 a share, down from his previous forecast of $30 –representing a potential upside of around 35%.

‘The world has changed in the past month,’ Jonas said in a note on Tuesday. ‘However, the story and the balance sheet remain intact.’

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Virgin Galactic outperforms S&P 500 amid Covid-19

The spaceflight tour company has seen significant volatility in recent weeks, with the Covid-19 pandemic wreaking havoc on global equities. But Virgin Galactic has managed to outperform the broader market, with it trading 48% higher year-to-date, while the S&P 500 is down 24% over the same period.

The reason the company has managed to come out on top is because it has no sales, with tickets to take tourists to the edge of space becoming available later this year, leaving investors to speculate on the success of space tourism and its other potential endeavours.

Virgin Galactic has said that it wants to develop hypersonic air travel – five times the speed of sound – which could see long-haul flights take a mere hour to complete.

If the company can achieve its goals its stock could skyrocket, with it able to take a significant chunk out of the air travel industry, which generates around $865 billion in revenues, according to data from the International Air Transport Association (IATA).