Virgin Galactic (SPCE) shares fell over 5% in pre-market Wednesday trade after Morgan Stanley analysts downgraded the rating to Underweight from Equal Weight.
The new price target of $1.75 implies a downside risk of ~18% compared to yesterday’s closing price.
“SPCE is pausing revenue-generating space flights as it conserves cash and redoubles efforts on Delta. We like the company's LT potential, but see limited opportunities for share price accretion during this upcoming lull period,” the analysts said in a client note.
The analysts see very few catalysts that could help shares to re-rate higher from current levels.
“Management is planning ~2 additional flights in 1H24, after which it will halt revenue-generating flight activity until the planned arrival of the first Delta-class ships in ~2026.”
Hence, the analysts see “more limited share price accretion potential during this lull relative to the rest of our coverage.”
SPCE shares are down almost 39% this year.