Vertically integrated, Virgin Galactic Holdings (SPCE) is an aerospace services provider for individuals and researchers. It owns advanced air and space vehicles for manned space flight.
The company is a pioneer in this field. SPCE is currently developing a space flight system so people can travel into space and have a transformative experience as a result.
Shares of Virgin Galactic Holdings have fallen more than 60% in the past year. Profits are missing, and they are necessary to lift the price up. It will happen, but it could take years.
So, for the very near future, current conditions do not allow to project prices that would justify a purchase today.
Thus, I am bearish on this stock.
About the Foreseeable Future: Scarce Incentive for the Share Price
The market needs these kinds of incentives: a regular stream of positive news about sales and earnings so that the share price can rise over time.
Despite the price to pay, $450,000 for a ticket, bookings for the space travel exceeds the company’s expectations, but the three-month period ended at a loss. In the third quarter of 2021, Virgin Galactic suffered a loss of nearly $50 million, although less than last year.
The company has to organize several trips within a year, with expensive preparations. The watchdog ensures that everything is working properly and, if necessary, clears up any irregularities that may arise during the test operation of the spacecraft.
So, demand is needed to cover costs and generate profits, the main catalyst of the stock price.
The Financial Condition
The balance sheet had $732 million in cash and $26 million in total debt as of September 30, 2021. In the last 12 months, free cash outflow was $241.7 million. The current ratio is 6.65, and the total debt/equity ratio is 0.03. The company does not pay a dividend.
Wall Street’s Take
In the past three months, 10 Wall Street analysts have issued a 12-month price target for SPCE. The company has a Hold consensus rating, based on five Buys, two Holds, and three Sell ratings.
The average Virgin Galactic Holdings price target is $28.6, implying 189.5% upside potential.
Conclusion
Last year’s share price disappointed shareholders. In addition, the stock fell short when using this stock comparison tool with some of the most relevant players among aerospace and defense companies.
Virgin Galactic Holdings is not expected to trade significantly above current levels before making a profit.
Download the TipRanks mobile app now
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure
