In a note to investors, Morgan Stanley analyst Adam Jonas stated that Virgin Galactic’s stock will soar as it proves out a long-term plan of flying people around the world at hypersonic speeds.
“A viable space tourism business is what you pay for today … but a chance to disrupt the multi-trillion-dollar airline [total addressable market] is what is really likely to drive the upside,” he wrote.
Virgin Galactic shares rose 16% in trading to close at $8.42.
Morgan Stanley’s price target of $22 a share represents a 203% increase from Virgin Galactic’s current levels.
Morgan Stanley forecast $800 billion in annual sales for hypersonic travel by 2040. Virgin Galactic is in the early stages of exploring how the technologies it developed for space tourism might apply to hypersonic travel, with Boeing venture arm HorizonX recently investing $20 million into Sir Richard Branson’s company specifically to explore hypersonics.
“While some investors have described high-speed hypersonic P2P air travel opportunity as ‘the icing on the cake’, we see Hypersonic as both the cake and the icing, with Space Tourism as the oven,” Jonas said.