Virgin Galactic SPCE shares fell on Monday, extending Friday s steep losses, after UBS downgraded its rating of Richard Branson's Space tourism company to sell from neutral and said the shares could dip another 25 per cent amid ongoing delays in additional test flights and regular commercial service.
UBS analyst Myles Walton downgraded Virgin Galactic to sell with a one-year price target to $15 U.S. in less than three months, a little more than three months after he downgraded the company to neutral from buy with a price target of $45.
Virgin Galactic shares dropped almost 17 per cent on Friday after the company said it was making schedule changes that would push back the start of full commercial flight as well as delay a critical test until 2022. At last check, the stock was down 4.45 per cent at $19.12 to $19.12.
Walton cited valuation concerns after his last downgrade, though noted at the time that he remained optimistic in the event way ahead. This time, the analyst said regular delays that push back additional service could prompt the stock to fall another 25 per cent.
More than 600 people — who purchased tickets for between $200,000 and $250,000 when Virgin Galactic sold its first batch of tickets several years ago — are currently waiting on the waiting list for a flight.
In a statement issued on Friday, Virgin Galactic said it was focusing on an enhancement program to improve the performance of its rocket-powered plane VSS Unity and the mother ship that it launches from. It also plans to carry out physical inspections after a possible reduction in the strength margins of certain materials was confirmed by a lab test. Branson became the first person to venture aboard a space rocket that they helped finance in July, traveling with three other crew members. Jeff Bezos was followed by other billionaire and Amazon AMZN founder Tesla days later into space. Elon Musk, founded by Tesla CEO Tesla TSLA is also competing in SpaceX as a competitor in the space race.
For her July flight, united 22, Branson was investigated by the U.S. Federal Aviation Administration for deviating from its assigned flight path. Virgin Galactic said in September that it had been cleared by the FAA to fly again after the regulator accepted its corrective actions. The famed 90-year-old actor Bezos last week became the oldest person to travel to space when he rode aboard a rocket and capsule built by Blue Origin, the private space flight company of William Shatner.