Virgin Galactic could climb 33% as demand for commercial space travel accelerates, says Jefferies

• Virgin Galactic shares could rise 33% over the next year, Jefferies said on Tuesday.
• Virgin Galactic could see revenue climbing to $1.7 billion by 2030 as demand for space flights grows.
• Jefferies initiated coverage on billionaire Richard Branson's company with a buy rating.

Virgin Galactic shares could climb by more than 30% over the next 12 months, said Jefferies, which sees the company ramping up in value as demand swells in the space tourism market.

Virgin Galactic is selling tickets starting at $450,000 for a seat on future rides to space after July's first flight with a full crew, including founder Richard Branson, to the edge of space. Tesla CEO Elon Musk reportedly is among the 600 people who have made a reservation by putting down a $10,000 deposit.

"We believe Virgin Galactic has strong long-term prospects supported by a growing backlog and early mover advantage coupled with a unique experiential offering," said Jefferies equity analyst Greg Konrad in a Tuesday note initiating coverage with a buy rating.

Jefferies put a 12-month price target of $33 on the stock, which represents 33% upside from Monday's closing price of $24.88. Shares during Tuesday's session rose as much as 9.4% then trimmed the advance to 8%.

It said Virgin Galactic's attractive outlook is boosted as it stands to offer 660 flights a year by 2030, up from current capacity of about 36. "This supports the ability to meet demand, which is underscored by a desire to explore space coupled with an addressable market that could approach $120 billion of potential future demand and supports a rise to $1.7 billion of revenues by 2030," said Konrad.

"Near-term the biggest headwind is supply, which should expand over the next three to four years capturing the financial benefits within backlog," he said.

The firm estimated Virgin Galactic to have four spaceships in its fleet by 2025 then increasing to 14 spaceships and $1.7 billion of revenue in 2030 based on 3,360 passengers.

Virgin Galactic shares have been whipped around during 2021, surging to as much as $62.80 in mid-February then later pushed into negative territory before recovering for a 5% gain for the year through Monday's session.