Virgin Galactic rockets higher after Morgan Stanley says interest in the stock matches Tesla

Sir Richard Branson rings a bell on the floor of the New York Stock Exchange (NYSE) as Virgin Galactic (SPCE) begins public trading in New York, U.S., October 28, 2019.

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Sir Richard Branson rings a bell on the floor of the New York Stock Exchange (NYSE) as Virgin Galactic (SPCE) begins public trading in New York, U.S., October 28, 2019.
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Brendan McDermid/Reuters
  • Virgin Galactic soared more than 14% Wednesday morning after Morgan Stanley said investor interest in the stock rivals that seen for Tesla.
  • The bank’s analysts “are having more conversations” about Virgin Galactic than any other US stock they cover “with the possible exception of Tesla,” according to a Wednesday note.
  • Morgan Stanley noted that the company’s shares are approaching its $22 price target, but added that the stock “still has more than 250% upside potential” to the analysts’ $60 bull-case target.
  • Watch Virgin Galactic trade live here.

Richard Branson’s Virgin Galactic spiked more than 14% in early Wednesday trading after Morgan Stanley analysts said the stock’s investor interest in on par with Tesla.

The company is already nearing the $22 price target set by Morgan Stanley in December, and is up 95% from its first day of trading in late October. Yet analyst Adam Jonas notes his $60 per share bull-case implies an additional 250% climb, and that a “significant increase” in investor interest can drive the stock higher in its first year of public trading.

The investment bank has noticed “a materially greater frequency” of investors who “understand the pitch” and want to learn more about the company’s position in the space-travel industry. The analysts “are having more conversations on SPCE” than any other US stock they cover “with the possible exception of Tesla,” they wrote Wednesday.

Tesla has been among the most talked-about stocks since its June 2010 initial public offering, as investors bet on whether the electric-car company could turn a profit and push into a new vehicle sector. It recently retook the crown as the most-shorted stock in the US, yet the automaker soared to a record high Wednesday as improving sentiment on Wall Street and the opening of its Shanghai Gigafactory propped up share prices through January.

Virgin Galactic’s stock is already up about 65% year-to-date, massively outperforming the S&P 500’s 3% gain in the same period. The jump is even beating Tesla’s 40% gain in 2020.

Virgin Galactic’s Wednesday run sets it up for an eighth consecutive record close.

Virgin Galactic also stands to profit from investors’ “greater appreciation” of hypersonic travel and the company’s opportunity in the industry, Morgan Stanley said. The bank initiated coverage on Virgin Galactic shares on December 9, saying that the company’s greater investment opportunity comes from an expansion into hypersonic travel. The rapid point-to-point service could drive as much as $800 billion in annual sales by 2040, according to Morgan Stanley.

The analysts maintain an “overweight” rating on the company’s stock, along with their $22 price target.

Virgin Galactic traded at $18.89 per share as of 1:15 p.m. ET Wednesday.

The company has a consensus price target of $19 from the three analysts covering the stock, according to Bloomberg data.

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