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Why Virgin Galactic Stock Surged Today

By Joe Tenebruso – Updated Sep 8, 2020 at 5:13PM

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The space tourism pioneer's shares could soar more than 40%, according to one investment bank.

What happened

Shares of Virgin Galactic Holdings (SPCE -6.67%) jumped 9.3% on Tuesday after Swiss multinational investment bank UBS placed a buy rating on the aerospace company's stock. 

So what 

UBS analyst Myles Walton believes Virgin Galactic's share price could reach $25 in the year ahead. His price forecast represents potential gains for shareholders of more than 40%, compared to the stock's current price near $17.50.

A view of Earth from a Virgin Galactic spaceflight.

UBS analyst Myles Walton sees plenty of upside for Virgin Galactic's investors. Image source: Virgin Galactic.

Walton says space tourism will become a $3 billion industry by 2030. In turn, he sees Virgin Galactic's annual ticket sales growing 300% annually through 2024. Walton also sees the company becoming a key player in the overall "space economy," which he believes could be worth as much as $805 billion within the next decade. 

Now what 

In addition to its first-mover status, Walton also highlighted some of Virgin Galactic's other key competitive advantages, including its marketing and brand-building expertise. Billionaire founder Richard Branson knows how to make a splash, and he's helped to position the company's offerings as a futuristic, top-flight experience for the well-to-do. "Going to space isn't routine," Walton said. "In fact, it's exceptional; but the entrance of billionaires into the space realm makes it more plausible now." 

As a pioneer in what could be a massive new space-based market, Virgin Galactic has a tremendous growth opportunity before it. And if it can fulfill its awesome potential, its investors stand to be richly rewarded.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc. The Motley Fool has a disclosure policy.

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