Virgin Galactic (SPCE) investors haven’t had much to cheer about recently, but the latest news out of the space tourism company’s HQ was greeted positively by investors. On Wednesday, the company disclosed it had awarded a contract to Boeing subsidiary Aurora, to build its future fleet’s first two motherships.
Aurora has extensive experience constructing lightweight, large-winged experimental aircraft, including eVTOL passenger planes and high-altitude pseudo satellites. The cost of building the new spaceships was not made public, although Virgin did confirm that the first aircraft will be built in time for the new Delta-class spaceship’s debut flight – slated for 2025.
Management also said that all component and subassembly duties will be done at Aurora’s Columbus, Mississippi, and Bridgeport, West Virginia facilities, after which all the main pieces will be shipped to Virgin Galactic’s Mojave, California facility for the aircraft’s final assembly.
This is a good move, says Canaccord analyst Austin Moeller. “The shift of production work on the motherships over to Boeing can be viewed largely as a savvy de-risking effort by management that will free up their limited manpower for other design, development, and flight operations work,” Moeller explained.
Using the same engines and outside mold line as the current WhiteKnight Two mothership, the new mothership design is an evolution of the present one, similar to the Delta-class suborbital spaceplane. However, the new spaceships are a production series model, making use of materials and parts that put an emphasis on speedy flight turnaround times that should enable them to complete 200 annual flights.
Moeller thinks this development will be key for future success. “Bringing spacecraft and motherships into service that can conduct hundreds of suborbital flights will be crucial to the company making a dent in its 800+ person backlog and achieving meaningful revenue growth and profitability,” the analyst opined.
For now, however, and until upcoming flight test milestones go “according to plan to avoid another service delay for its ‘future astronaut’ clientele,” Moeller rates SPCE a Hold (i.e. Neutral) while his $8 price target suggests shares will climb ~11% higher in the year ahead. (To watch Moeller’s track record, click here)
Turning now to the rest of the Street, opinions are split evenly. 2 Buys, 2 Holds, and 2 Sells add up to a Hold consensus rating. At $9.5, the average price target brings the upside potential to ~31%. (See SPCE stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
