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Virgin Galactic Shares Extend Losses as UBS Downgrades to Sell

Virgin Galactic shares extend losses after UBS downgrades the company to sell from neutral and says the shares could dip another 25%.

Virgin Galactic  (SPCE) - Get Virgin Galactic Report shares fell on Monday, extending Friday’s steep losses, after UBS downgraded its rating on Richard Branson’s space tourism company to sell from neutral and said the shares could dip another 25% amid ongoing delays in additional test flights and regular commercial service. 

UBS analyst Myles Walton downgraded Virgin Galactic to sell from neutral with a one-year price target to $15, a little more than three months after he downgraded the company to neutral from buy with a price target of $45. 

Virgin Galactic shares plummeted almost 17% on Friday after the company said it was making schedule changes that would delay a critical test flight as well as push back the start of full commercial service to the end of 2022.

Shares of Virgin Galactic on Monday closed 1.5% down at $19.72.

Walton cited valuation concerns following his last downgrade, though noted at the time that he remained optimistic in the “event path ahead.” This time, the analyst said additional delays that push back regular commercial service could prompt the stock to fall another 25%.

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More than 600 people -- who purchased tickets for between $200,000 and $250,000 when Virgin Galactic sold its first batch of tickets nearly a decade ago -- are currently on the waiting list for a flight.

In a statement Friday, Virgin Galactic said it was focusing on an "enhancement program" to improve the performance of its rocket-powered plane VSS Unity and the mother ship from which it launches. It also said it plans to carry out physical inspections after a lab test "flagged a possible reduction in the strength margins of certain materials."

Branson became the first person to ride into space aboard a rocket they helped fund in July, traveling with three fellow crew members. He was followed into space days later by fellow billionaire and Amazon  (AMZN) - Get Amazon.com, Inc. Report founder Jeff Bezos. SpaceX, which was founded by Tesla  (TSLA) - Get Tesla Inc Report CEO Elon Musk, is also competing in the space race.

Branson's July flight, Unity 22, was investigated by the U.S. Federal Aviation Administration for deviating from its assigned flight path. Virgin Galactic said in September that it had been cleared to fly again by the FAA after the regulator accepted its "corrective actions."

Meantime, 90-year-old acting legend William Shatner last Wednesday last week became the oldest person to fly to space and back when he rode aboard a rocket and capsule developed by Blue Origin, the private spaceflight company founded by Bezos.