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Virgin Galactic stock SPCE plunges after delays to spaceflights

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Virgin Galactic pilots make their way to SpaceShipTwo Unity spacecraft attached to the Jet Carrier Eve.

Virgin Galactic

Virgin GalacticStocks plunged after the company announced that it will delay spaceflights until next year while it repairs its aircraft.

Virgin Galactic had hoped to launch its next spaceflight by September. However, Virgin Galactic changed their plans and began the upgrade period for its VSS Unity spacecraft. It is anticipated that the refurbishment will take between eight and 10 months and should be completed by August. Renovating the cars would mean Virgin Space Flights’ next mission will be delayed until mid-2022.

Virgin Galactic also had spaceflights for Unity 23-24 and Unity 25. The company’s previous timelines have been rescheduled until the refurbishment is complete. According to the company, it plans to launch commercial service in the fourth quarter of 2022, as was anticipated by Unity 25’s mission.

Virgin Galactic’s shares plunged as high as 19% from $24.06 in their premarket close.

Wall Street reacts

Bank of America reduced its Virgin Galactic price target from $25 to $20 per shares and retained its low-perform rating. The company’s increased uncertainty and lackluster clarity around the changes was cited by Bank of America.

Ron Epstein, a Bank of America analyst wrote that “we are uncertain about how the company can forecast such an unknown future event after the recent failure of calling the timing right for a relatively-known brief-term event.” “The company didn’t outline how the program would track progress and make it available to the public.”

Canaccord Genuity maintained its $48 price target, and a buy rating. The firm informed investors that Virgin Galactic’s changes in schedule are not significant to the company’s plans for space tourism.

Austin Moeller, Canaccord Genuity analyst, wrote that the enhancement period which will increase VSS Unity’s flight readiness every 4-5 week and VMS Eve endurance to 100, is important for boosting customer launch cadence.

Truist, too, maintained its Buy rating and set a $50 price target. However, Truist informed investors that Virgin Galactic’s revised schedule “equates in lost momentum” in space tourism.

In a note, Truist analyst Michael Ciarmoli stated that SPCE might see “signs of a market-leading position being eroded with the stock drifting lower.” We believe that this delay is not important to SPCE’s long-term intrinsic value.

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