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Bank of America is out with a guide to the commercial space market and the major companies involved.
The Space Market: Bank of America’s Ronald J. Epstein believes the commercial space market will hit $1.4 trillion by 2030. Epstein cites increased defense spending, growth in satellites, space tourism and resource extraction as ways the industry can grow.
The space market was worth $414.8 billion in 2018, with government spending of $85.5 billion making up 21% of the total.
Bank of America tracks 23 aerospace and defense companies and listed 14 of them in the report that had some exposure to the space industry.
The Pure-Play Companies: “Pure play space companies tend to be private, most aerospace and defense companies under our coverage have some exposure to the space industry,” Epstein wrote in a note.
Virgin Galactic (NYSE: SPCE) was assigned a Street-high price target of $35 by Epstein on Monday. This came as he sees the company as one of the only pure-play space companies being publicly traded.
The space tourism sector also includes privately held Blue Origin, Sierra Nevada and SpaceX. Boeing Company (NYSE: BA) is also listed in the space tourism sector. Epstein said SpaceX is firmly in the lead over Boeing for ferrying passengers into space.
SpaceX, founded by Tesla Inc (NASDAQ: TSLA) CEO Elon Musk, hit a valuation of $36 billion recently. The company is the first private company to complete manned and unmanned missions to the International Space Station.
Musk has been hesitant to discuss a possible IPO date for SpaceX, with eyes set on reaching Mars before that happens.
The High Exposure Companies: Boeing was listed as one of three tracked companies that has high exposure to the space industry. The other two covered by Bank of America are Lockheed Martin Corporation (NYSE: LMT) and Northrop Grumman Corporation (NYSE: NOC).
Boeing and Lockheed Martin are major players in the space market with their 50/50 joint venture called United Launch Alliance, which was founded in 2005.
The Moderate Exposure Companies: Bank of America highlighted General Dynamics Corporation (NYSE: GD) and L3Harris Technologies (NYSE: LHX) as the companies with moderate exposure to the space industry.
Increased Investments for Space Companies: In 2019, space startups saw $5.7 billion invested in their businesses. This was an increase of 61% over the prior year.
Bank of America also highlights the involvement of some of the richest people in the world behind the space industry. This include Amazon.com (NASDAQ: AMZN) founder Jeff Bezos (Blue Origin), which he funds with $1 billion of Amazon shares sold each year as well as Bill Gates (Kymete), Richard Branson (Virgin Galactic), Larry Page (Planetary Resources), Paul Allen (Scaled Composites).
Benzinga’s Take: Epstein has set a large target for the space industry to hit in 2030. The increase in government spending, space tourism, satellites, and the militarization of space are all key reasons behind this price target.
Virgin Galactic remains the best pure-play way to play the space tourism boom, with Boeing and Lockheed Martin as other benefactors.
Investors continue to hope a SpaceX IPO will happen sometime in the future, which could put even higher valuations on space-related stocks.
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