Virgin Galactic Holdings Inc (NYSE:SPCE) is trading lower Wednesday morning following a downgrade by BofA Securities.
Last weekend, the U.S. Federal Aviation Administration updated Virgin Galactic's existing commercial space transportation operator license that the company has held since 2016, allowing it to fly customers to space. Following the news, the stock surged nearly 40% higher.
BofA Securities analyst Ronald Epstein downgraded Virgin Galactic from Buy to Underperform and announced a $41 price target today.
"We continue to see Virgin Galactic as a beneficiary of the new commercial space race. However, we believe this premium is already priced into the stock and will dwindle as more commercial space companies go public," Epstein said in a note.
Virgin Galactic is developing a Mach 3 aircraft which will reduce the flight time from Los Angeles to Tokyo from 12 hours to four hours. It has a capacity ranging between nine to 19 seats and will work as a flight on a private jet. It is working with Rolls Royce on a new design for Mach 3.
Currently, Virgin Galactic is offering to take you into space for $250,000 but it is working on reducing the costs to make space tourism possible for those who are willing to explore space.
If the company offers a ticket for $100,000, there will be many willing to explore the space and it can change the way we view science fiction. SPCE stock will drive massive gains for investors once commercial flights begin.
The stock opened Wednesday lower by $1.12, or 2.4%, to $45.90.
