Is Virgin Galactic Stock a Buy Right Now? This Is What You Need to Know
No one said taking a commercial flight into space was going to be easy. The latest evidence just confirmed the challenge such an undertaking represents.
On December 12, a Virgin Galactic (SPCE) test flight had to be aborted, following the VSS unity (SS2) engine’s failure to ignite due to a communication issue between the propulsion system and the onboard computers which observe the rocket motor.
Falling to reach space, the VSS Unity turned around and managed to glide safely back down to Spaceport America, with neither of the pilots hurt.
This was the first of three planned powered test flights before commercial operations are slated to kick off. Credit Suisse analyst Robert Spingarn believes “early indications are that this first test flight will need to be repeated.”
The analyst thinks it is unlikely the company was “able to gather the necessary data to complete its final two validation elements for the FAA.”
The company is now evaluating the data to find out what caused the glitch. SPCE management put a positive spin on proceedings and highlighted the fact the fail-safe scenario had inadvertently proved it worked, and so does Spingarn. In fact, the analyst expects long-term investors to take advantage of the consequent share weakness.
“Although the powered test flight was not a success,” the 5-star analyst said, “The silver lining is that SPCE was able to prove that its built in fail-safe scenarios worked properly enabling SS2 to glide safely back to Earth without jeopardizing the safety of anyone on board. The successful triggering of fail-safe scenario should help quell some investor concerns over the risk of a catastrophic event as SPCE begins commercial operations. To the latter point, some LT investors may view this sell-off as an opportunity to buy the dip.”
Accordingly, Spingarn rates SPCE an Outperform (i.e. Buy) along with a $26 price target, which implies a slight upside from current levels. (To watch Spingarn’s track record, click here)
Likewise, the rest of Wall Street remains confident Virgin Galactic can execute on its space travel promise. Based on 4 Buys and 1 Hold, the stock has a Strong buy consensus rating. (See SPCE stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
