What happened

Shares of Virgin Galactic Holdings (SPCE -1.20%) fell nearly 10% on Wednesday morning after a Wall Street analyst downgraded the shares. Virgin Galactic stock has already doubled so far in 2021, and at least one analyst is concerned the stock is getting ahead of the business.

So what

Virgin Galactic is giving investors a lot to get excited about. After a series of delays in 2020 the space tourism company appears to be back on track toward its goal of launching service, and bringing in revenue, in 2021.

The Virgin Galactic Unity spacecraft shown attached to its mother ship.

Image source: Virgin Galactic.

A busy test schedule, and perhaps the stock's high short interest coming into the year, has rocketed the shares higher.

UBS analyst Myles Walton hit the pause button late Tuesday, rerating the stock from a buy to a neutral, but upping his price target to $52 from $35. Walton is still a believer in the company, but wants to be "mindful" on valuation after what he called a "stratospheric" move to the share price in recent months.

Now what

It's hard to value Virgin Galactic on fundamentals right now, since the company has very little revenue coming in and no profits. Walton's $52 per share price target is about 50 times his estimate for earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025.

The Virgin Galactic story is fun, and investors aren't focused on fundamentals right now. Just understand that a lot has to go right for the stock to even come close to justifying its current price. At best Virgin Galactic should be a small part of a diversified portfolio.