|SPCE||VIRGIN GALACTIC HOLDINGS INC.||25.19||+0.44||+1.78%|
In a note to clients, Morgan Stanley analyst Kristine Liwag said she and her team expect Virgin Galactic shares to return to a price target of $25 as the company transitions from a "catalyst-rich period" to a prolonged period of no flights. The stock's move would imply a 20% drop from recent levels of $31.33 per share.
"After the expected flight of Unity 23 in September 2021, the company’s sole mothership, Eve, will be grounded for an 8-month enhancement period. During this heavy maintenance period, Virgin Galactic will not be able to conduct any space flights until summer of 2022," Liwag wrote. "We view it positively that the company is investing in increasing its long-term space flight capacity; however, these investments take time."
Additionally, Liwag expects Virgin Galactic to generate roughly $1.3 billion in sales and about $743 million in earnings before interest, taxes, deprecation and amortization by 2030.
Wednesday's drop comes a day after shares plunged on news Virgin Galactic would be raising its ticket price for a spaceflight from $250,000 to $450,000 following its successful Unity 22 mission in July. The ticket sales will initially prioritize "spacefarers" and the company's "early hand raisers" before opening to the rest of the public.
"We expect many consumers will want to fly with friends or family, and we will customize the experience to meet their individual preferences," Virgin Galactic CEO Michael Colglazier told investors Thursday on the company's second-quarter earnings call.
Virgin's range of product offerings for private astronaut flights will include a single- seat, a multi-seat, couples, families and friends package and a full-flight buyout.
Colglazier noted the company's next spaceflight, Unity 23, will focus on microgravity research and the professional astronaut training experience. Unity 23 will carry members of the Italian Air Force. Virgin plans to charge $600,000 per seat on its future microgravity research and professional astronaut training flights.
VSS Unity and VMS Eve will then undergo their enhancement periods. The enhancements, subject to testing and verification, could reduce Unity's turnaround flight to four to five weeks, down from their current rate of seven to eight weeks, and potentially allow VMS Eve to fly 100 flights between major maintenance inspections, compared to the current interval of 10 flights, accroding to Colglazier.
Following the enhancement periods, Virgin will conduct its fully crewed Unity 24 flight, which will validate the modifications and serve as final confirmation of the mid commercial cabin. Unity 25, which is slated for late in the third quarter of 2022, will then mark the start of commercial service with private astronauts.
In addition to VSS Unity and VMS Eve, Virgin is working on a fleet of "Delta Class" vehicles, which will be capable of turnarounds on a one-week interval, as well as a next-generation mothership.