- Wednesday, October 16, 2024
Space tourism pioneer Virgin Galactic recently faced some difficult decisions that have resulted in a notable development. Truist analyst Michael Ciarmoli made the decision on Wednesday to upgrade shares of Virgin Galactic to Hold from Sell. Additionally, he revised the target price for the stock from $1 to $3 per share.
In premarket trading, Galactic stock experienced a 3.5% increase. Meanwhile, S&P 500 and Nasdaq Composite futures were up 0.1% and 0.2% respectively.
Ciarmoli acknowledged that while Virgin Galactic's choice to halt commercial operations in mid-2024 to focus on capital deployment towards the development of the Delta fleet was prudent, it also diminished the possibility of significant upside or downside catalysts in the near future. As a result, he sees the stock as stagnant.
Virgin Galactic's Delta-class ships are larger and lower-cost spacecraft designed to accommodate six passengers on trips to the edge of space, compared to the four passengers currently accommodated by the company's existing aircraft. Virgin Galactic previously announced that it would reduce its workforce, suspend commercial flights, and concentrate on getting the Delta ships ready for service, which is anticipated to occur around 2026.
With approximately $1 billion in cash reserves, Virgin Galactic does not face any immediate "liquidity concerns," according to Ciarmoli. However, since the Delta ship is still years away from operation, he does not see any compelling reason to invest at this time.
Building a new space-based business has proven to be a challenging endeavor for Virgin Galactic. Since its inception, the company has invested around $1.6 billion in its business but has only generated approximately $17 million in sales.
According to FactSet, approximately 33% of analysts who cover Virgin Galactic rate its shares as Hold, while 17% rate them as Buy, and 50% rate them as Sell. On average, about 55% of analysts covering an S&P 500 stock recommend buying shares, while approximately 10% suggest selling and 35% suggest holding.
The average analyst price target for Virgin Galactic stock is around $2.70 per share.
As of Wednesday's trading, Virgin Galactic stock has experienced a decline of roughly 96% from its record high of $62.80 in February 2021 and an increase of approximately 65% from its record low of $1.38 in October 2023.
Shares have risen by approximately 30% since the company announced its strategic pivot in November.
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