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: Virgin Galactic ‘leader’ of a future billion-dollar space-tourism market

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Virgin Galactic Holdings Inc. is ready to reap the benefits of a soon-to-be $8 billion market with not much competition yet for high-profile space-tourism travel.

That’s from Ken Herbert at Canaccord, who on Wednesday initiated coverage of Virgin Galactic’s stock
SPCE,
+5.00%

at a buy with a price target of $35, implying an upside of 30% from current prices.

See also: Virgin Galactic’s ‘major milestone’ space flight boosts stock to best in 6 weeks

Space tourism will possibly be an $8 billion market by 2030, Herbert said in a note.

“While competition from Blue Origin and others is accelerating, we believe the industry will be supply-constrained for the next several years,” he said.

Blue Origin was founded by Amazon.com Inc.
AMZN,
+0.95%

Chief Executive Jeff Bezos.

Virgin has raked in the benefits of Saturday’s first successful rocket-powered flight to the fringe of space in a manned shuttle, which put the company closer to its goal of offering space-tourism flights. The stock is up nearly 30% in the week.

Don’t miss: Virgin Galactic’s ‘major milestone’ space flight boosts stock to best in 6 weeks.

The company has 600 reservations, and the overall addressable market is estimated to be around 1 million people.

“Our revenue model assumes (about) 14,000 passengers over the next 10 years,” Herbert wrote, with Virgin Galactic reaching about $1.7 billion in annual revenue in 2030), which represents around 20% of the addressable market, he said.

Virgin shares have gained 66% in the last 12 months and 14% this year, compared with advances of 40% and 12% for the S&P 500 index
SPX,
+0.27%

in these same periods.

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