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Virgin Galactic stock rockets 12% higher; worth a look?

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A year after lifting founder Richard Branson into orbit, Virgin Galactic orders two new planes to carry its space vehicles aloft. Are the program and the stock back on track?

Virgin Galactic (SPCE) rocketed higher today, or at least its stock did.

Shares of Richard Branson's space tourism company got a 10% lift when it announced it had contracted with Boeing (BA) subsidiary Aurora Flight Services to build two "motherships" to carry its next-gen spaceplanes aloft.

After a decline of more than 84% over the past year, new flights and a firm schedule could lead investors to take a fresh look at the stock. The private space race is highly competitive, but right now Virgin Galactic is the publicly-listed only pure play on space tourism.

Branson in orbit

Almost a year ago, on July 11, 2021, the company's sole spaceplane Unity carried Branson and a crew into space. Unity and its carrier plane, Eve, have been undergoing maintenance since, according to Space.com.

The next suborbital flight is expected next year, while the new carriers and next-gen space vehicle would fly in 2025. Galactic uses a carrier plane to lift the space vehicle aloft to about 50,000 feet; they then separate and the space plane's rocket carries it higher.

About a minute later, passengers are free to unbuckle and float around the cabin, according to Virgin's website.

Tourists would pay US$450,000 for the flight, and the company reports a long waiting list.

The space race

Investors may have lifted the stock thinking a firm schedule will again give it an edge. Shares traded as high as US$52.76 a year ago, just before the Branson flight. They've dwindled to US$7.22 today.

But analysts so far aren't impressed, with the average analyst price estimate at US$9.14 a year from now. Of 12 analysts covering the stock, according to Yahoo Finance, only two rate the stock a buy. Seven say hold, and three say it will underperform the US market.

That's partly because the competition is fierce. One principal competitor is Blue Origin, which took founder and CEO Jeff Bezos (of Amazon fame) into space on July 20, 2021. The other is SpaceX, which first took astronauts to the International Space Station in May 2020. (SpaceX's CEO Elon Musk, founder of Tesla, hasn't flown into orbit yet.)

Blue Origin and SpaceX have worked with NASA and have broad goals for their space programs; Branson's company seems primarily focused on tourism.

The key difference for investors: SpaceX and Blue Origin remain private companies. So at the moment, Virgin Galactic is the only pure stock play on companies lifting humans into space.

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