Virgin Galactic ‘overdue’ for a correction, Morgan Stanley says after 310% rally in 3 months


Virgin Galactic’s spacecraft Unity flies to its new home in at Spaceport America in New Mexico on Feb. 13, 2020.

Virgin Galactic

Virgin Galactic‘s monster stock rally in the past few months has taken even bullish Morgan Stanley by surprise, with shares of the company nearing $40.

“A modest correction is overdue, and frankly, healthy, in our opinion,” Morgan Stanley analyst Adam Jonas said in a note to investors titled “even spaceships must return to Earth.”

Despite Morgan Stanley’s warning, Virgin Galactic rose more than 2% in premarket trading.

The space tourism’s stock has climbed 310% in the past three months. Its rally accelerated recently, notching gains across eight consecutive days of trading.

Virgin Galactic has become Wall Street’s favorite speculative play, with shares blowing past the price targets of all three firms that recommend buying the stock. Trading platforms like Fidelity and SoFi told CNBC that Virgin Galactic has become the most popular stock among retail investors, jumping past even Apple and Tesla.

Virgin Galactic “deserves a bit of a breather here,” Jonas said, adding that it is difficult “to identify significant thesis changing/accelerating events since the time of our initiation in early December of 2019.”

“The stock is trading 70% above our $22 price target with around 60% upside to our $60 bull case,” Jonas said.

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