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Why Virgin Galactic Stock Jumped 8.4% on Wednesday

By Travis Hoium - May 26, 2021 at 4:11PM

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Wall Street is jumping on the space tourism bandwagon.

What happened 

Shares of space company Virgin Galactic Holdings (SPCE 0.14%) jumped as much as 8.4% in trading on Wednesday after the company got an analyst upgrade. Shares trailed off late in the day but were still up 7.5% at 3:30 p.m. EDT. 

So what

The catalyst today was analyst Ken Herbert at Canaccord, who initiated coverage on the stock and gave it a $35-per-share price target. He said the company will get a positive catalyst when space tourists start flying, especially celebrities like founder Richard Branson. 

A person wearing a headset looks out the window of a space plane.

Image source: Getty Images.

What's been clear for a while is that it's unknown exactly how long it will take to increase the cadence of flights and expand spaceports around the world. That's a risk factor, but with the test flight last weekend under the company's belt, this should be a big-time growth stock over the next few years. 

Now what

Analyst upgrades don't do anything to change the fundamentals for a stock, but they can give some credence to your investment thesis. In this case, Canaccord is jumping on the Virgin Galactic bandwagon after the most recent test flight in hopes of riding the company's commercial space flight business. But that bullish thesis has been in place for well over a year for long-term investors. Today was just a vote of confidence from Wall Street, which is why the stock is up big again.  

Travis Hoium owns shares of Virgin Galactic Holdings Inc. The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc. The Motley Fool has a disclosure policy.

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