Shares of Virgin Galactic (SPCE) - Get Virgin Galactic Report dropped on Friday after the space tourism company said that it was delaying the start of commercial flights further into 2022 and analysts at Bank of America lowered their price target.
The company, founded by Australian entrepreneur Richard Branson, says it will delay the start of commercial flights to fourth-quarter 2022 from its previous plan for the third quarter.
The delay is designed to enable the Las Cruces, N.M., company to upgrade its vehicles.
“Recent laboratory-based tests flagged a possible reduction in the strength margins of certain materials used to modify specific joints, and this requires further physical inspection,” the company said in a statement.
"Given the time required for this effort, the company has determined the most efficient and expedient path to commercial service is to complete this work now in parallel with the planned enhancement program."
Bank of America reiterated its underperform rating while cutting its price target to $20 a share from $25.
"The company failed to outline how progress will be tracked and communicated to the public throughout the enhancement program," analyst Ronald Epstein said.
"While there will be little progress toward commercialization within the next year, SPCE also no longer possesses a scarcity premium as the only publicly traded pure-play space company."
Virgin Galactic shares at last check dropped 14% to $20.66.
In late September, Virgin obtained Federal Aviation Administration approval to resume flying FAA-licensed space flights. That's after the agency had completed an inquiry that focused on air traffic control clearance and real-time mission notification related to the space company’s Unity 22 flight in July.
The FAA advised Virgin Galactic that it had accepted the company's proposed corrective actions, concluding the inquiry, which had begun Aug. 11.
The federal agency on Sept. 2 grounded Virgin Galactic’s SpaceShipTwo spacecraft after a yellow caution light appeared on the ship’s console during its July 11 test flight into space.