Virgin Galactic Sell Rating Affirmed Amidst Increased Cash Burn and Delayed Operational Milestones

Matthew Akers, an analyst from Wells Fargo, maintained the Sell rating on Virgin Galactic Holdings (SPCE – Research Report). The associated price target was lowered to $0.75.

Matthew Akers has given his Sell rating due to a combination of factors surrounding Virgin Galactic Holdings. The company is facing a peak in cash burn expected in the second half of the year, with significant capital investments looming on the horizon for a new hangar and training facilities. Moreover, despite the plans to reopen ticket sales for space flights in 2025, there is no immediate, clear positive catalyst that could drive the stock value up in the near term. Akers also points out the delayed entry of a new mothership to 2028, which likely contributes to a cautious outlook on the company’s operational capabilities.
Additionally, Akers has adjusted the price target downwards to $0.75, a decrease from the previous $1.00, based on a discounted cash flow analysis with an assumed weighted average cost of capital at around 11% and a terminal growth rate of 2%. This adjustment reflects expectations that Virgin Galactic will only gradually scale up to approximately 1,000 passengers per year by the end of the decade. The revised free cash flow burn estimates for 2025 and 2026 also suggest sustained financial consumption without a proportional revenue increase, further justifying the underweight position on SPCE.

Akers covers the Industrials sector, focusing on stocks such as GE Aerospace, Hexcel, and Raytheon Technologies. According to TipRanks, Akers has an average return of 24.6% and an 83.33% success rate on recommended stocks.

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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.