Virgin Galactic (SPCE) PT Lowered to $36 at Canaccord Genuity After Convert Offering

January 14, 2022 7:30 AM EST
Get Alerts SPCE Hot Sheet
Price: $7.12 +2.01%

Rating Summary:
    3 Buy, 6 Hold, 6 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 8 | Down: 40 | New: 22
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Canaccord Genuity analyst Austin Moeller lowered the price target on Virgin Galactic (NYSE: SPCE) to $36.00 (from $44.00) after the company announced plans to offer $425M in convertible notes, with purchasers receiving an option for an additional $75M. The senior notes will mature in February 2027 and are redeemable in February 2025. This offering is incremental to the remaining $500M in the company’s shelf following completion of a $500M equity offering in July 2021. However, the notes can only be redeemed if the stock price rises 130% higher than the conversion price for an
established time period.

The analyst reiterated a Buy rating, stating "In our discussion with management today, the current schedule to initiate passenger space travel in Q4/22 was maintained. The company also put out a release today declaring that its Q4 FCF use was 25% better than expected at ~($67.5M), which management attributed to labor efficiencies and the reallocation of work not associated with the critical path on spaceship/mothership upgrades to Q1/22. Completing the “enhancement period” for both VSS Unity and VMS Eve, in addition to progressing through flight testing for the new VMS Imagine spaceship remain crucial to the company increasing passenger throughput to burn through its initial backlog of 600 tickets priced at $250k before moving to the more valuable block of $450k tickets."

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