Virgin Galactic: Buy the big car

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The world needs a hero in times of crisis.

Step forward Adam Stanley’s Jon Jonas, who, while the world is falling into what may be the fastest economic stop since Noah’s introduction of his ark, is looking to a glorious future beyond this decaying planet.

Yes that’s right.

A future….

…in space.

Of course flown there by Virgin Galactic:

We are lowering our target price to $ 24 due to a higher discount rate, lower flights and a discount on our hypersonic TAM. With the negative movement of stocks and the unchanged thesis, our base case shows a significant upward trend. We derive our price target from the sum of two parts: (1) USD 14 / share for space tourism (DCF); and (2) $ 10 / share for Hypersonic, assuming a 25% probability weighting of our $ 40 phase 3 DCF rating based on the COVID 19 base case. Our space tourism (DCF) is dropping from a higher discount rate ($ 3) and lower flights ($ 1). In the meantime, our Phase 3 Hypersonic P2P rating is moving from a 20% COVID 19 discount on our Hypersonic TAM to USD 40 / share on an undiscounted basis. For the context, the stock is currently trading at a earnings ratio of ~ 1.6x our sales estimate for 2030. We believe the stock is experiencing a significant delay in the space tourism business with early recognition of the hypersonic opportunity (phase 3) or a combination of both.

1.6 times sales in 2030? Why didn’t you tell us beforehand? This is an intergalactic buying opportunity for generations.

Related links:
Virgin Galactic is skyrocketing, when will it return to Earth? – N3ON Alphaville
Virgin Galactic Channels Thomas Piketty – N3ON Alphaville
The best of Morgan Stanley’s Adam Jonas – N3ON Alphaville
Reddit: Bull Attack – N3ON Alphaville

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