Virgin Galactic Stock Is Dropping Because It Lifted Off Too Fast

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Barron's 30 June, 2021 - 01:39pm 19 views

Is Richard Branson going to space?

Richard Branson's Virgin Orbit successfully launches second rocket this year from a 747 jet. Virgin Orbit, the satellite-launching spinoff of Sir Richard Branson's Virgin Galactic, sent its second mission of the year to orbit on Wednesday. CNBCRichard Branson's Virgin Orbit successfully launches second rocket this year from a 747 jet

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Virgin Galactic stock got a rare double downgrade–from Buy to Sell–from Bank of America, following a blindingly rapid surge in the price. It is a reminder that although things are looking up for the space-tourism company, there are still risks investors should consider.

Analysts usually upgrade or downgrade stocks one notch at a time, going from Buy to Hold, and from Hold to Sell. BofA’s Ronald Epstein went directly from Buy to Sell after the price recently blew past his $41 target.

On Wednesday morning, the stock was down 6.7% to $43.89, though it has rallied about 50% over the past month. The S&P 50 0 was modestly lower on Wednesday morning, while the Dow Jones Industrial Average was a bit higher..

Investors who blinked may have missed the gain. Shares were below $15 in May as Virgin Galactic struggled with flight-testing delays. Management’s getting testing back on track, which led to the receipt of a Federal Aviation Administration license to carry paying customers, sent the stock back above $55 less than a week ago.

FAA approval is a big deal, but analysts expected the news. “We continue to see Virgin Galactic as a beneficiary of the new commercial space race,” wrote Epstein in his downgrade report. “However, we believe this premium is already priced into the stock and will dwindle as more commercial space companies go public.”

Competition is coming. Blue Origin, for instance, is about to take founder Jeff Bezos, his brother, and a commercial passenger who paid $28 million for the ride, into space.

Epstein believes space is risky and that investors should build in a little cushion for delays and other potential bad news. Galactic stock, for instance, was hammered after the company disclosed in late February that it was struggling to manage electromagnetic interference on test flights. Fixing that problem delayed the start of commercial operations.

Epstein isn’t the only analyst who downgraded the stock after its epic rise. Alembic Global Advisors analyst Peter Skibitski cut his rating to Hold this week. Now three out of nine, or 33%, of analysts covering Galactic rate the shares at Buy, compared with six of 10 as June began. The average Buy-rating ratio for stocks in the S&P 500 is roughly 55%.

The average analyst price target is about $32 a share, an increase of close to $2 since approval to carry paying customers was granted.

Write to Al Root at allen.root@dowjones.com

Virgin Galactic stock got a rare double downgrade–from Buy to Sell–from Bank of America, following a blindingly rapid surge in the price.

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Stocks making the biggest moves midday: Bed Bath & Beyond, Virgin Galactic, WideOpenWest and more

CNBC 01 July, 2021 - 01:00am

WideOpenWest — The U.S. cable operator saw its stock price increase 13.4% after it announced it will sell five of its service areas in two separate deals for a combined $1.8 billion in an effort to lower its debt. The transactions are expected to close in the second half of the year.

Bed Bath & Beyond — Shares of the retailer jumped 11.3% after reporting better-than-expected sales results for its fiscal first quarter and raised its full-year outlook. Volume in the stock was abnormally high, suggesting that part of the rise might be due to a return of Reddit traders that helped to boost shares earlier this year.

Virgin Galactic — Shares dropped 2.1% after Bank of America double-downgraded the stock to underperform from buy. The firm said that Virgin Galactic's surging stock price has already priced in much of the eventual gains expected when the company launches space tourism. BofA also noted the space sector continues to carry risk and volatility.

MongoDB — Shares of the database platform company lost 5.7% after it said it would sell 2.5 million Class A common shares, seeking to raise $889 million. MongoDB said it plans to use the proceeds of the sale for general corporate purposes.

Advanced Micro Devices — The semiconductor company's stock is up 4.9% after Bank of America reiterated its buy rating on it, calling the stock "compelling" and "underappreciated."

Constellation Brands — Shares of the spirits and beer maker rose nearly 1.3% after the company's quarterly report. Constellation Brands reported adjusted quarterly profit of $2.33 per share, matching Wall Street forecasts, according to Refinitiv. Its revenue came in slightly above estimates.

Las Vegas Sands  — The casino and resort company's stock traded 2.96% higher after reports came out saying Covid-related restrictions between Hong Kong and Macau, where the company owns and operates five properties, will loosen in July. Travelers from Hong Kong to Macau are currently required to quarantine for 14 days upon arrival.

General Mills — The food producer saw shares rise 1.5% after it reported quarterly earnings of 91 cents per share, beating analysts' estimates by 6 cents. The company also reported $4.52 billion in revenue, on estimates of $2.02 billion.

 — CNBC's Hannah Miao, Yun Li and Jesse Pound contributed reporting

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Branson mum on when he'll launch to space on Virgin Galactic

Yahoo News 01 July, 2021 - 01:00am

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FILE - In this Monday, Oct. 28, 2019 file photo, Richard Branson, right, founder of Virgin Galactic, and company executives gather for photos outside the New York Stock Exchange before his company's IPO. In an interview after the Wednesday, June 30, 2021 satellite launch by his separate company Virgin Orbit, Branson said that he has to be “so circumspect” in what he says about Virgin Galactic. “All I can say is when the engineers tell me that I can go to space, I’m ready, fit and healthy to go. So we’ll see,” he said.

FILE - In this Monday, Oct. 28, 2019 file photo, Richard Branson, right, founder of Virgin Galactic, and company executives gather for photos outside the New York Stock Exchange before his company's IPO. In an interview after the Wednesday, June 30, 2021 satellite launch by his separate company Virgin Orbit, Branson said that he has to be “so circumspect” in what he says about Virgin Galactic. “All I can say is when the engineers tell me that I can go to space, I’m ready, fit and healthy to go. So we’ll see,” he said.

CAPE CANAVERAL, Fla. (AP) — Virgin Galactic’s Richard Branson won’t say when he’ll ride his rocket ship to space or whether he's looking to become the first billionaire to launch aboard his own rocket.

In an interview after Wednesday’s satellite launch by his separate company Virgin Orbit, Branson told The Associated Press he has to be “so circumspect” in what he says about Virgin Galactic, a publicly traded company.

“All I can say is when the engineers tell me that I can go to space, I’m ready, fit and healthy to go," Branson said. “So we’ll see.”

Amazon's Jeff Bezos is targeting July 20 for his rocket company's first launch with people. The Blue Origin flight from West Texas will include Bezos, his brother, a charity auction winner who's shelling out $28 million and a fourth unidentified person.

Unlike Elon Musk's SpaceX, Virgin Galactic and Blue Origin are looking to send space tourists on brief up-and-down hops — not into orbit around the world.

Branson visited Virgin Galactic’s New Mexico base before flying to California’s Mojave Desert for Wednesday’s plane-launched, multi-satellite mission.

Virgin Galactic plans three more test flights to the edge of space this summer and early fall, before launching customers. The company originally put Branson on the second upcoming flight, but has refused to say whether it's moving him up to the next one.

Branson would not comment Wednesday on which flight he'll be on — he wouldn't even say when the next flight might be. He did acknowledge it's “very important” for potential customers to see him strap in for a ride, before opening the doors to the paying public.

The thrill-seeking adventurer, who turns 71 in a few weeks, said he's “not apprehensive at all” about launching into space.

“It's a dream of a lifetime," he told the AP.

Last week, Virgin Galactic got the Federal Aviation Administration's OK to start launching customers. More than 600 people already have reserved a ride to space. Tickets initially cost $250,000, but the price is expected to go up once the company starts accepting reservations again.

Virgin Galactic made its third flight to space in May, with two pilots in the cockpit of the winged spaceship. Like Virgin Orbit, Virgin Galactic uses an aircraft to get off the ground and waits until it reaches high altitude before releasing and firing the rocket.

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Wall Street Analyst Says Virgin Galactic Hype Already Priced In

Yahoo Finance 01 July, 2021 - 01:00am

Epstein might have gotten whiplash after seeing shares of Virgin Galactic surpass the USD 41 price target he had on the stock. Last Friday, shares climbed from just over USD 40 to almost USD 56. Epstein believes the space hype is already priced into the stock. That would mean that last Friday’s rally was the encore before the spacecraft left even the earth with passengers.

Meme stocks tend to trade on social media sentiment instead of fundamentals, but the downward notches have taken a toll. The stock is down 1.5% today, extending yesterday’s sell-off.

Bank of America is the second Wall Street firm to lower its rating on Virgin Galactic since the company received regulatory approval for passenger flights to suborbital space. Alembic Global’s Pete Skibitski in recent days lowered his rating on the stock from overweight to neutral, blaming a valuation that has “now stretched to excess levels.” The same could be said for the entire meme stock category.

And while the analyst didn’t backpedal, he did leave room to change his mind when Branson’s rocket takes flight, which will most likely be this summer. Skibitski reportedly acknowledged that the trip could be a potential driver of the stock price, suggesting that there might be more runway for gains.

The price turnaround could come sooner than analysts think. Billionaires are a competitive bunch, and Jeff Bezos, who is behind space tourism company Blue Origin, has already slated his flight to take place on July 20. According to reports, Branson is now eyeing liftoff on the weekend of July 4 to beat his rival to the punch. Retail investors on the WallStreetBets forum aren’t expecting Branson to rush his plans.

Investors who are in SPCE for the long term don’t appear to be too worried about the recent profit-taking. In the meantime, Virgin Galactic is sitting on USD 600 million in cash, though it burns through that quickly, given the company’s lofty mission. Morgan Stanley analysts don’t expect Branson’s company to produce positive free cash flow for another seven years even in the best of scenarios. With tickets to space running USD 250K a pop, and hundreds of reservations in the pipeline, this meme stock could have more surprises for Wall Street up its sleeve.

Why These 2 Moonshot Stocks Are Falling Back to Earth Wednesday | The Motley Fool

Motley Fool 30 June, 2021 - 02:08pm

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

The stock market looked poised to finish the first half of 2021 on a positive note Wednesday, as major market benchmarks held at or near all-time record levels. As of 1:30 p.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) had climbed 177 points to 34,469. The S&P 500 (SNPINDEX:^GSPC) had picked up 2 points to 4,294, while the Nasdaq Composite (NASDAQINDEX:^IXIC) had eased slightly lower by 18 points to 14,510.

Stocks in the aviation and space industries have seen their prospects soar lately, with promising progress on amazing cutting-edge technology. Yet on Wednesday, shares of Virgin Galactic Holdings (NYSE:SPCE) and AeroVironment (NASDAQ:AVAV) ended up losing altitude. Below, we'll go through what happened with these two companies and what their long-term futures look like.

Shares of Virgin Galactic Holdings were down another 1% Wednesday afternoon after having been lower by as much as 8% earlier in the session. The space tourism company had seen its stock soar in the aftermath of its getting approval from the Federal Aviation Administration to take paying passengers into space, but since then, Virgin Galactic's share price has fallen close to 20% in just the past few days.

The stock analyst community has jumped in to say that Virgin Galactic's recent gains might have been more extreme than warranted by fundamentals. On Monday, analysts at Alembic Global argued that the big move higher last week fully priced in the benefits of the FAA decision and then some, and it cut its rating on Virgin Galactic's stock from overweight to neutral on valuation concerns. Paragon Intel weighed in with a report highlighting the massive cash outlays Virgin Galactic will need to make going forward.

On Wednesday, analysts at BofA made an even more extreme move, cutting their rating on Virgin Galactic all the way from buy to underperform. Analysts highlighted another potential threat, because as Virgin Galactic's rivals earn similar FAA authority, it'll likely dilute the first-mover value that has been a big boost to the share price.

Nevertheless, bullish investors seemed to step in during Wednesday's trading, in the hopes that Virgin Galactic's long-term promise will outweigh short-term fluctuations. With the company still months away from completing its test flight schedule, Virgin Galactic shareholders will have a long wait ahead of them.

Shares of AeroVironment took a much bigger hit Wednesday afternoon, falling 13%. The maker of unmanned aerial vehicles and other cutting-edge technology released quarterly and full-year results that fell short of what more bullish investors had hoped to see.

AeroVironment's numbers were mixed. Revenue  for the fiscal fourth quarter inched higher by less than 1%, underwhelming investors with higher expectations. Yet adjusted earnings of $1.04 per share jumped nearly 40% year over year. Full-year fiscal sales climbed at an 8% pace, while adjusted earnings were higher by 14% from fiscal 2020 levels.

The big question is whether AeroVironment can successfully integrate its recent acquisitions. A wider variety of drones would potentially help the company meet the needs of more current and prospective customers.

Meanwhile, AeroVironment has set reasonably high expectations for fiscal 2022, including sales guidance of $560 million to $580 million and adjusted earnings of $2.50 to $2.70 per share. If it can reach those goals, then AeroVironment might finally get the lift its stock needs to reach new all-time heights.

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Why Virgin Galactic Stock Sank Today | The Motley Fool

Motley Fool 30 June, 2021 - 09:52am

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

The stock of space tourism company Virgin Galactic Holdings (NYSE:SPCE) has been flying high recently. Shares shot up almost 40% last Friday after a positive business development. But the stock is giving some of that back today, trading down about 7.5% as of 10:30 a.m. EDT.

Today, Bank of America Securities issued a downgrade on Virgin Galactic stock, knocking it down two notches from a buy rating to underperform (sell), as reported by CNBC. The firm cited the fact that it believes the good news reported last week is now fully priced into the stock. Last week, the Federal Aviation Administration (FAA) gave the company a license for passenger space flights after its latest successful test flight in May.

Virgin Galactic's VSS Imagine. Image source: Virgin Galactic.

The test flight reached a speed of Mach 3 and an altitude of 55.5 miles. Prior to the FAA approval, only crew members were allowed on flights. Virgin Galactic still plans another three test flights, but the license allowing customers on board is the first time the FAA has approved a space company to fly paying passengers. 

But trading in the stock had been active prior to the recent news. Since the start of May, the 30-day average daily volume has grown by more than 300%. Some activity has been linked to retail traders who follow Reddit's WallStreetBets. Bank of America seems to feel that this activity has now brought the price beyond its fair valuation, and some shareholders are booking profits today. 

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Virgin Galactic Gets a Double Downgrade From Bank of America

TheStreet 30 June, 2021 - 07:53am

The bank’s analysts acted on valuation. They still believe in the company’s success, but the current premium in its stock price “will dwindle as more commercial space companies go public,” the Bank of America analysts wrote.

Virgin Galactic, founded and partly owned by billionaire Richard Branson, skyrocketed 39% last Friday after the Federal Aviation Administration gave it approval for space flights.

But it has dropped 20% since then, including a 5.27% slide Wednesday to $44.54. The stock soared 98% in the six months through Tuesday.

As for the FAA approval, it follows a May 22 test flight from the group's launch base in Spaceport America, New Mexico, when its VMS Eve and VSS Unity reached an altitude of 55.5 miles and a top speed of Mach 3.

The group also plans to have its first crewed test flight later this summer, likely in the weeks following the maiden flight of Amazon founder Jeff Bezos' Blue Origin rocket company.

Meanwhile, Brent Kenwell wrote on TheStreet Friday that “Virgin Galactic now has the catalysts that bulls have been waiting for and all-time highs aren’t that far away.

“I love the chart for Virgin Galactic stock. It’s such a good trading vehicle and really respects the technical,” he said.

Stocks making the biggest moves in the premarket: Virgin Galactic, Bed Bath & Beyond, MongoDB & more

CNBC 30 June, 2021 - 06:53am

Virgin Galactic (SPCE) – The space transportation company's stock dropped 3% in premarket trading, after Bank of America Securities double-downgraded the stock to "underperform" from "buy." BofA notes the recent spike in the stock after the company received approval to carry passengers into space, and said the premium earned by Virgin Galactic's leading position is already reflected in the stock price.

Bed Bath & Beyond (BBBY) – The housewares retailer reported quarterly profit of 5 cents per share, missing consensus estimates by 3 cents a share. Revenue came in above analysts' forecasts. Bed Bath & Beyond predicted better-than-expected current-quarter comparable sales, and raised its full-year revenue outlook.  The stock surged 7.9% in the premarket.

Xpeng (XPEV) – Xpeng will raise $1.8 billion in its Hong Kong initial public offering, according to people with direct knowledge of the matter who spoke to Reuters. The Chinese electric vehicle maker's U.S. shares fell 2.3% in premarket trading.

MongoDB (MDB) – MongoDB said it would sell 2.5 million class A common shares, seeking to raise $889 million. The database platform provider plans to use the proceeds for general corporate purposes. MongoDB stock lost 4.5% in premarket trading.

Constellation Brands (STZ) – The spirits and beer maker reported quarterly profit of $2.33 per share, matching Wall Street forecasts. Revenue came in slightly above estimates.

General Mills (GIS) – The food producer beat analysts' estimates by 6 cents a share, with quarterly earnings of 91 cents per share. Revenue was above estimates as well. Organic net sales fell by 6% from a year ago, however, a reflection of the surge in at-home demand as the pandemic was taking hold.

Twitter (TWTR) – Twitter appointed its vice president of global solutions Sarah Personette as chief customer officer. She replaces Matt Derella, who is leaving Twitter after nine years at the company.

Las Vegas Sands (LVS) – Las Vegas Sands rose 1.7% in the premarket following reports that border restrictions between Hong Kong and Macau will loosen in mid-July. Currently, any traveler from Hong Kong to Macau is required to quarantine for 14 days.

Seagate Technology (STX) – Seagate Technology was upgraded to "equal weight" from "underweight" at Barclays. The firm cites an improving market for the hard disk drive maker, particularly in mobile computing.

WideOpenWest (WOW) – The broadband provider's shares rallied 4.4% in the premarket after it announced a deal to sell five of its service areas in two separate deals for a total of about $1.8 billion.

DR Horton (DHI) – The home builder was named a "top pick" by Goldman Sachs. Goldman notes that stocks in the sector are down about 15% from May highs and feels that DR Horton is best positioned to execute against industry headwinds.

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