Turn on the green light and sound the all clear — Virgin Galactic (SPCE) is back on track, and its stock is a "buy." Or so says Canaccord analyst Kenneth Herbert.

Herbert argues that after a long hiatus from the momentum investing world, the "leader in the emerging space tourism market" finally has the bugs worked out of its "SpaceShipTwo" spaceplane (SS2), and is clear to fly as much as ~30% higher over the next 12 months before it hits his price target of $35 a share. (To watch Herbert's track record, click here)

Here's why.

In February 2021, if you recall, Virgin Galactic unceremoniously canceled a planned test flight of SS2. Instead, said management, it was postponing further flight tests until May while it worked out why a previous, failed flight test in December 2020 had to be aborted.

That delay set the stage for three long months of Virgin Galactic stock underperforming the stock market — indeed, for losing nearly three quarters of its value between mid-February and mid-May. The good news, though, is that on Saturday, May 22, Virgin Galactic announced that it had indeed identified and fixed the problem that scotched the December flight test — and successfully flew SS2 to space and back.

With that accomplished, argues Herbert, "we believe the cadence of activity is scheduled to increase" from here on out, that Virgin Galactic will announce a resumption of "future astronaut" ticket sales later this year, and that it could wrap up its flight test program by the end of 2021, so as to begin commercial operations (and begin making revenue) as early as Q1 2022. And to support this "accelerated tourist activity," Virgin Galactic now has two fully complete spaceplanes ready to carry space tourists — and is working on a third.

So how big could this market get?

In Herbert's estimation, the space tourism market "can be worth $8B [in annual sales] by 2030." Virgin Galactic already has 600 reservations booked for its future flights (worth $150 million at the company's widely-advertised $250,000 ticket price) — and that's just the beginning. In total, the analyst estimates that "the addressable market [for Virgin Galactic's services] is well over 1 million individuals," and possibly more than that. Globally, 17.6 million potential customers have net worths in excess of $1 million (such that they could afford a $250,000 once-in-a-lifetime ticket). 1.9 million of those folks are worth at least $5 million (such that they could easily afford a ticket).

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Even with Blue Origin "and others" (meaning SpaceX) taking some of the potential business, says Herbert, that would still leave a large total addressable market for Virgin Galactic to sell tickets to. By 2030, Herbert posits a doubled ticket price of $500,000. Based on that price, he predicts the space tourism pioneer will do as much as $1.7 billion in annual revenues on those sales (so taking about 21% of the $8 billion market), and generate earnings before interest, taxes, depreciation, and income approaching $500 million a year.

Whether any of this justifies paying the $6.5 billion that Virgin Galactic currently costs — or the $8.5 billion that Herbert thinks it is worth — 10 years before any of this happens remains an open question.

What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 7 Buys and 4 Holds add up to a Moderate Buy consensus. In addition, the $30.80 average price target indicates 14% upside potential. (See SPCE stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.