🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

BofA cuts Virgin Galactic price target on reduced expected flight volumes

Published 03/16/2023, 04:58 PM
Updated 03/16/2023, 05:18 PM
© Reuters BofA cuts Virgin Galactic price target on reduced expected flight volumes

By Davit Kirakosyan

BofA Securities cut its price target on Virgin Galactic Holdings Inc (NYSE:SPCE) to $3.00 from $4.00 while maintaining an Underperform rating due to reduced expected flight volumes in the upcoming years, caused by Unity being the only operational vehicle until 2026.

Additionally, the firm now expects fewer available passenger seats on initial commercial flights as well, in line with management comments.

The firm mentioned that the VMS Eve mothership has returned to Virgin Galactic's Spaceport America facility after completing much of the enhancement program. This program included upgrading the launch pylon, installing new horizontal stabilizers, and improving the avionics and mechanical systems. With this work done, Virgin Galactic is ready to begin commercial service in Q2/23 with VSS Unity.

The company has confirmed that VSS Imagine, the second spaceship in their fleet, is currently idle. The company's engineering capabilities are instead focused on preparing VSS Unity for its first commercial flight and ensuring the readiness of the Delta-class and Next-Gen Mothership fleets for widespread entry into service in 2026.

“While we understand the approach, we believe leaving the VSS Imagine vehicle idle leaves SPCE vulnerable if VSS Unity were to be taken out of service,” said the firm.

In 2023, the company plans to prioritize completing their Delta-class and mothership designs, tooling assembly, and parts fabrication, with ground and flight testing scheduled for 2025, aiming for entry into service for both platforms by 2026.

The firm reduced its EPS estimates on higher operating expenses through the out-years to ($1.82) from ($0.72) in 2023, ($1.39) from ($0.37) in 2024, and ($1.29) from ($0.19) in 2025.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.