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Bank downgrades Virgin Galactic

September 26, 2024

Sir Richard Branson’s space tourism business, Virgin Galactic, suffered a bank’s serious downgrade to its share price. Morgan Stanley had given Virgin Galactic a share price target of $35. That price has been slashed to just $5 in the bank’s latest report issued on September 24th.

The bank was blunt and cited ongoing challenges for the business and a lack of near-term catalysts for the stock, not least the suspension of flights until approximately 2026.

According to Morgan Stanley, “the stock’s year-to-date slide (down ~85 per cent) reflects the realisation that the business model / attractive economics are premised on delivering a new fleet on schedule and at cost.”

The company completed its last flight in June 2024 and does not anticipate resuming revenue-generating flights until the first Delta-class spaceship enters service, said the bank.

Virgin Galactic’s prospects are treated somewhat sceptically by the bank which doubts Virgin’s ability to meet its ambitious goals.

“Successful production of the first two Delta ships and their ability to sustain high frequency flights must first be proven to realize SPCE’s ‘initial fleet’ economics,” the bank says.

Virgin’s own forecasts talk of $450 million in annual revenue at 20-25 per cent margins, and is contingent on achieving a steady flight cadence by late 2027.

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