Analyst Michael Ciarmoli of Truist Financial maintained a Sell rating on Virgin Galactic Holdings (SPCE – Research Report), with a price target of $1.00.
Michael Ciarmoli has given his Sell rating due to a combination of factors that include potential future execution risks and significant cash burn forecasted for the coming periods. One of the main reasons is that Virgin Galactic Holdings has announced a plan to pause commercial flights from mid-2024 until 2026 in order to focus on their Delta program. Although this move is expected to allow the company more longevity with their current capital resources, it does pose an elevated risk as the company shifts its focus.
Another reason for the Sell rating is the company’s announcement to reduce its workforce and restructure the company to concentrate resources on the Delta spacecraft program. This decision, while expected to create savings in the long run, increases the execution risk and potentially future choke points. Furthermore, despite an increase in the cadence of Delta flights once operational, the company still falls short in revenue expectations for FY23, indicating further cash burn. Lastly, the company’s plans for a subsequent mothership are now set for 2027 as part of the broader restructuring plan, delaying potential revenue generation.
SPCE’s price has also changed dramatically for the past six months – from $4.080 to $1.560, which is a -61.76% drop .
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Virgin Galactic Holdings (SPCE) Company Description:
Virgin Galactic Holdings Inc is a United States-based vertically-integrated aerospace company pioneering human spaceflight for private individuals & researchers, and it also manufactures advanced air and space vehicles. Using its technologies, it is developing a spaceflight system designed to offer its customers a unique, multi-day, and transformative experience. This culminates in a spaceflight that includes views of Earth from space and several minutes of weightlessness that will launch from Spaceport America, New Mexico.
Read More on SPCE:
- ‘Don’t Get Too Excited,’ Says Top Analyst About Virgin Galactic Stock
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- Options Volatility and Implied Earnings Moves Today, November 08, 2023
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