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  • Earnings
  • disruptive innovation
  • robotics

Can Virgin Galactic’s share price regain orbit after Q3 earnings?

Virgin Galactic [SPCE] is tipped to report eightfold higher earnings and 27% lower losses year on year when it reports its third-quarter figures on 8 November. The main catalyst for the group’s share price lies in the schedule of its commercial space flight programme. Its price floats up and then floats back down again, depending on its space tourism timelines.

The Virgin Galactic share price zoomed 21% higher from the start of July to the middle of the month, after founder Sir Richard Branson’s maiden flight in its Unity spaceship.

However, the share price has plunged back down to earth again – 63% from its July high of $52.69 to $19.62 at the close on 4 November, after the group put back its plans to start flying paying companies into space to the fourth quarter of 2022.

That was down to the need for more technical enhancements and refurbishment on its spacecraft which, over the years -— since the group was founded in 2004 — have been plagued by mechanical problems and crashes.

Virgin Galactic remains confident, however. “We have a purposeful range of product offerings in order to satisfy the different ways people will want to share this experience of private astronaut flights,” Virgin Galactic CEO Michael Colglazier, said as reported by CNBC.

“We have a purposeful range of product offerings in order to satisfy the different ways people will want to share this experience of private astronaut flights” - Virgin Galactic CEO Michael Colglazier

 

When it went public via a SPAC in 2019, Virgin Galactic forecasted that it would be flying 66 passengers in 2020 and 646 in 2021. It has not happened yet.

Its share price also took a wallop from the huge publicity Branson’s rival, Amazon [AMZN] founder Jeff Bezos received when his Blue Origin spacecraft recently took actor William Shatner — aka Star Trek’s Captain Kirk — into orbit.

 

No catalysts for SPCE shares

Analysts at Zacks expect Virgin Galactic to post a loss per share of $0.25, which would mark a 26.47% improvement on the same period last year.

For the full year, it sees a loss of $1.46 per share and revenue of $2.19m, which would be a drop of 16.8% and a rise of 820% respectively.

According to Market Screener, analysts have a consensus Outperform rating on the stock and an average target price of $28.18.

Investors.com reported that Jefferies has a Buy rating and a $33 price target. It sees the group’s total addressable market at $120bn and revenue hitting $1.7bn by 2023.

$1.7billion

Virgin Galactic's estimated revenue by 2023

Bank of America cut the stock to Underperform as the premium already priced in was likely to fall as more space tourism firms — maybe Blue Origin — go public.

UBS analyst Myles Walton, as reported by Benzinga, was also feeling less starry-eyed about the group. Walton lowered the Virgin Galactic rating to ‘sell’ from ‘neutral’ because of the delay in its next powered flights and wrote while “results of September-quarter ticket sales will serve as the focal points on the company's upcoming earnings call, [it does not] seem a material upside catalyst.”

In the second quarter, Virgin Galactic reported a loss of $0.39 per share — more than the $0.33 loss analysts had forecast. Its revenues came in at $571,000, boosted from scientific research experiments that took place on its May spaceflight test.

 

Demanding more detail

Analysts will be looking for more information on the delay to the commercial flights and what technical enhancements are needed. How extensive are they? Did something critical emerge after Branson’s flight?

They will also be keen to find out on advanced ticket price sales and any developments with Virgin and NASA’s astronaut-training programme. The deal revealed last May to develop a sustainable high-Mach supersonic aircraft with NASA will also be of interest.

Last year, Virgin also sealed a deal with engine maker Rolls-Royce [RYCEY] to partner in designing and developing supersonic technology for commercial aircraft.

There are some experts who see this as being the true value of Virgin Galactic rather than space tourism for the wealthy few.

Any further information on the above could give the Virgin Galactic share price the rocket it so badly needs.

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