In a report released yesterday, Douglas Harned from Bernstein maintained a Sell rating on Virgin Galactic Holdings, with a price target of $2.00.
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Douglas Harned has given his Sell rating due to a combination of factors impacting Virgin Galactic Holdings. The company reported a significant cash burn in Q2, which, although slightly improved from the previous quarter, remains above the target level. This high cash consumption is concerning, especially as the company continues to invest heavily in the production of new spaceships, leading to an all-time high in capital expenditures.
Additionally, the timeline for commercializing the Delta class spaceships and launching the research ship program has been delayed, raising concerns about the company’s ability to ramp up its flight operations as planned. Despite raising funds through an equity raise, the cash requirements remain substantial, and the current resources may not be sufficient to meet future growth needs. Consequently, Harned’s valuation model reflects a lower target price, emphasizing the risks associated with the company’s financial health and operational timelines.
Harned covers the Industrials sector, focusing on stocks such as Boeing, GE Aerospace, and General Dynamics. According to TipRanks, Harned has an average return of 10.8% and a 55.81% success rate on recommended stocks.
In another report released on August 8, Morgan Stanley also maintained a Sell rating on the stock with a $2.50 price target.