Jefferies on Tuesday began coverage of Virgin Galactic with a buy rating, saying the company can tap into the firm's estimated $120 billion market for space travel demand. "The business model is simple; more customers + more spaceships to meet demand drives topline growth," Jefferies analyst Greg Konrad wrote in a note to investors. Jefferies estimates that, once the company has four spaceships in its fleet, Virgin Galactic will be able to bring in about $440 million in revenue by 2025 and $1.7 billion in 2030. Shares of Virgin Galactic rose 8% in trading from its previous close of $24.88. Jefferies has a $33 price target on the stock, implying a 32% upside over the next year. Virgin Galactic stock has fallen off sharply from the highs near $55 a share hit in the weeks before founder Richard Branson's spaceflight on July 11 . Shares of Virgin Galactic have dropped 41% in the third quarter after the company sold $500 million in a stock offering to raise cash, a pair of ratings downgrades by Morgan Stanley and Credit Suisse and Branson selling more of his stake in the company . Jefferies' new coverage of Virgin Galactic came alongside a survey of 233 people with a net worth of over $1 million. A third of the Jefferies' survey respondents were interested in going to space, with 20% willing to spend over 5% of their net worth to do so. While Virgin Galactic's price point — which starts at $450,000 per person — is still "limiting those that can actually afford the experience," Jefferies said there are about 250,000 people "having the interest and the means to travel to space." "Coupled with rising wealth, this implies a potential ~$120 billion market for commercial space over time, which we believes is largely untapped," Konrad said. Catalysts ahead Virgin Galactic's reopening of ticket sales earlier this summer builds on its existing backlog of about 600 reservations, which Jefferies sees as a catalyst for the stock. The company's "concrete plans" for adding more spacecraft through its Delta class is "the biggest catalyst to relieving supply constrains, which on our estimates could come in 2024 with a substantial ramp in revenues," Konrad wrote. He noted the Delta class spacecrafts are expected to be able to embark on as many as 50 flight per year. That's a significant increase from its current spacecraft VSS Unity at 12 flights per year and the spacecraft Virgin Galactic just finished building, the VSS Imagine, at 18 to 24 flights per year. Another factor Jefferies highlighted in Virgin Galactic's favor is its "strong brand name recognition," important to selling the space travel experience to high net worth individuals. Virgin Galactic just trailed Elon Musk's SpaceX — at 86% versus 89% — in recognition among Jefferies' surveyed individuals. Jeff Bezos ' Blue Origin, the primary competitor to Virgin Galactic in the market of suborbital space tourism , "lagged" behind at 52% brand name recognition, Jefferies said. – CNBC's Michael Bloom contributed to this report.
Spacecraft VSS Unity lands on the runway at Spaceport America in New Mexico after the company's fourth spaceflight test on July 11, 2021.
Jefferies on Tuesday began coverage of Virgin Galactic with a buy rating, saying the company can tap into the firm's estimated $120 billion market for space travel demand.