Canaccord Genuity analyst Austin Moeller lowered Virgin Galactic Holdings Inc (NYSE:SPCE) price target to $36 (an upside of 259%) from $44 and maintained a Buy rating on the shares after the company announced plans to offer $425 million in convertible notes, with purchasers receiving an option for an additional $75 million.
- Moeller reduced the price target to reflect the potentially dilutive impact of the shares from the convertible note offering.
- However, in his discussion with management, the company maintained its schedule to initiate passenger space travel in Q4 of 2022.
- The analyst remains confident in Virgin Galactic's business model, which he says features a "promising" total addressable market of at least 1.3 million high-net-worth individuals.
- Moeller adds that the company has a spaceship platform that has already demonstrated the capability to transport humans into space.
- Separately, Virgin Galactic priced its offering of $425 million of 2.50% convertible senior notes due 2027 in a private offering. The issuance and sale of the notes are scheduled to settle on January 19, 2022.
- The company granted the initial purchasers an additional $75 million principal amount of notes.
- Net proceeds from the offering are anticipated to be ~$413.7 million. The company intends to use ~$52.3 million to fund the cost of entering into the capped call transactions and fund working capital, general and administrative matters, and capital expenditures to accelerate development.
- Also Read: Virgin Galactic Stock Drops Below A Key Support Level: What's Next?
- Price Action: SPCE shares are trading higher by 0.80% at $10.11 during the premarket session on Friday.