VSS Unity will reach the edge of space during its third space flight on May 22, 2021.
Following the company’s successful space test, Virgin Galactic’s shares rose in trading on Monday.
The launch on Saturday was a crucial step forward for the space tourism company. The test was delayed more than six months after an attempt was abandoned in December.
Michael Colglazier, CEO of Virgin Galactic, told CNBC the spaceflight was “flawless” and was looking forward to the Federal Aviation Administration reviewing the flight records. The company must meet two remaining regulatory milestones before receiving a key license.
Virgin Galactic shares rose 15% in early trading from the previous close of $ 21.07. The stock has also offset its loss since the start of the year. Earlier this month it fell more than 30% after previous setbacks and sales by notable shareholders over the course of the year.
Three more space tests
VSS Unity fires its rocket engine shortly after the start of its third space flight on May 22, 2021.
Saturday’s space test was the first of four remaining tests before it begins flying commercial customers. The next spaceflight test will carry four passengers to test the spacecraft’s cabin, while the third test is to fly founder Sir Richard Branson.
Bernstein, who has a market rating on the stock, has raised its price target from $ 18 per share to $ 27 per share.
“We believe that this business can have a highly attractive profitability if risks can be managed. We have reset our valuation model to our previous base case,” wrote Bernstein analyst Douglas Harned in a statement to customers.
Harned noted that the success of the flight increased the likelihood that the next three spaceflight tests “will be completed on schedule”.
However, Harned emphasized that two main risks remain to the company’s stock.
“First, any serious incident could be catastrophic for the company. Second, the terminal value is unclear as it is difficult to assess how far the value proposition will extend,” said Harned.
Virgin Galactic previously forecast that commercial service would begin in mid-2020. This year, the company pushed that target back to early 2022, stating that it would begin commercial service once the four spaceflight tests and a maintenance period are complete.
Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign in to start a free trial today.