This morning, for the second day in a row, space tourism company Virgin Galactic (NYSE:SPCE) gained a fan on Wall Street, as investment bank Credit Suisse joined UBS in singing the company's praises. Virgin Galactic stock leapt 7.5% in response to the news ... but then lost it all and more.
As of 11:30 a.m. EDT, Virgin Galactic shares are now in negative territory, down 1.6%.
Why the abrupt turnaround? Let's go to the tape.
Yesterday, Virgin shares soared more than 9% on news that UBS had initiated coverage of the space stock with a buy rating and a $25 price target. According to UBS, space tourism is destined to become a $3 billion industry over the next 10 years, and Virgin will lead the way with a 300% annual rate of sales growth over the next four years.
Today, Credit Suisse chimed in with a second vote of support, upgrading Virgin Galactic shares from neutral to outperform (reports TheFly.com). But, according to Credit Suisse, Virgin Galactic is worth only $24 a share -- less than UBS said yesterday.
Viewed from that perspective, Credit Suisse's new rating may be seen to detract from UBS' promises, rather than add to them.
Even more importantly, we already knew -- from Virgin itself -- that plans for a first commercial flight had been pushed back from 2020 into at least Q1 2021. But in UBS' note, there's a suggestion that Virgin's first commercial flight may actually not take place before "the second half of 2021."
This is news -- and not the good kind. As almost an afterthought, Credit Suisse just told us that it's possible investors may have to wait another year or more before Virgin Galactic finally begins generating the revenue that was initially expected to appear in 2020.
No wonder they're upset.