'Space Tourism Is Hard But Still A Reality': Why Analyst Cut Virgin Galactic's Price Target After Flight

Shares of Virgin Galactic Holdings Inc SPCE had a strong move on Monday after a successful test flight to space over the weekend. An analyst sized up the timeline for the company and what’s ahead.

The Virgin Galactic Analyst: Morgan Stanley analyst Kristine T. Liwag maintained an Equal Weight rating on Virgin Galactic Holdings and lowered the price target from $30 to $25.

The Virgin Galactic Takeaways: After a successful flight over the weekend, Liwag pointed out the delays the company had in the past and how it could affect the future of Virgin Galactic.

The flight over the weekend was called a “critical milestone” for the company but comes as the company still has risks.

“An investment in SPCE at this stage in the company’s lifecycle involves significant risk and volatility as well as potential opportunity,” the analyst wrote.

Liwag delayed the forecast for Virgin Galactic’s first commercial flight to 2022, assuming two commercial flights and 12 passengers flown in 2022. This would result in around $4 million in revenue for Virgin Galactic next year.

Revenue for fiscal 2030 was lowered from $1.8 billion to $1.3 billion by the analyst.

“Our new revenue assumption is based on 13 spaceships, 40 flights per ship/year flying approximately 3,100 passengers at nearly a $400,000/seat ticket price,” the analyst wrote.

Related Link: Virgin Galactic's Stock Lifts Off, Where Is It Headed Next

The analyst assigned a $17 value to shares for space tourism and $8 a share value on shares for point-to-point travel. The analyst lowered the bull case from $70 to $60 and keeps the bear case price target at $2.

SPCE Price Action: Shares of Virgin Galactic are down 4.83% to $25.59 Tuesday at market close. Shares were up 25% on Monday.

Disclosure: The author is long shares SPCE.

(Photo: Virgin Galatic)