Virgin Galactic(US:SPCE) Goldman Sachs·2025-05-20 07:35Investment Rating - The report maintains a Neutral rating on Virgin Galactic Holdings (SPCE) [1][8] Core Insights - Virgin Galactic expects to open Future Astronaut sales in 1Q26 and plans to commence commercial spaceflight in mid-2026, while continuing to develop its Delta Class spaceships [1] - The company is currently experiencing a high rate of free cash burn relative to its cash balance, raising concerns about its ability to scale without additional capital [1] - Demand for SPCE's offerings remains uncertain, complicating revenue and profitability projections [1] Financial Performance - SPCE reported an adjusted EBITDA of $(72) million for 1Q25, which was better than the FactSet consensus of $(77) million and the estimate of $(87) million [2][17] - The company generated $0.5 million in revenue during the quarter, with free cash flow usage of $(122) million, compared to $(117) million in the previous quarter and $(126) million a year ago [2][20] - SPCE expects free cash flow usage of $(115)-(105) million for 2Q25 [18] Revenue and Earnings Estimates - Revenue estimates for SPCE have been revised for 2025-2027, with projected revenues of $9.5 million in 2025 and $160.5 million in 2026 [3][19] - EPS estimates have been adjusted to $(12.25) for 2025, $(6.67) for 2026, and $(2.21) for 2027, reflecting changes in revenue and margin inputs [19] Price Target Methodology - The 12-month price target for SPCE has been revised to $32 from $36, based on a blend of three scenarios: 2025 EV/sales multiple, sub-orbital steady state, and an "everything works" scenario [19][22] - The target price reflects a significant upside potential of 566.7% from the current price of $4.80 [1]