Shares of Virgin Galactic (SPCE) are on the rise on Thursday after the company announced that the next rocket-powered test flight of SpaceShipTwo Unity will be conducted on May 22, pending weather and technical checks. The stock had been under pressure last week on a potential spaceflight delay due to an unexpected maintenance issue with carrier aircraft VMS Eve. 

TEST FLIGHT CONFIRMED: Virgin Galactic Holdings confirmed that the next rocket-powered test flight of SpaceShipTwo Unity will be conducted on May 22, pending weather and technical checks. This follows the completion of a maintenance review of VMS Eve, the mothership jet aircraft designed to carry SpaceShipTwo to an altitude of approximately 50,000 feet. The upcoming VSS Unity test flight will be crewed by two pilots and will carry research payloads as part of the NASA Flight Opportunities program.

A key objective of the upcoming flight will be to test the remedial work that has been completed on VSS Unity to lower the EMI levels experienced on the December 12, 2020 flight when the onboard computer halted ignition of the rocket motor. The flight will also incorporate all original test objectives, including assessment of the upgraded horizontal stabilizers and flight controls during the boost phase of the flight, evaluating elements of the customer cabin, and testing the live stream capability from the spaceship to the ground. Following this May flight, and in line with normal procedures, the team will complete an extensive data review, which will inform the next steps in the test flight program.

Commenting on the news, Truist analyst Michael Ciarmoli said he expects the stock to have a positive reaction after coming under "significant pressure" last week as investors had baked in at least a 2- or 3-month delay until the next flight. While the Mothership Eve maintenance issue that was disclosed last week spooked investors, a thorough maintenance review has cleared the way for the next test flight to commence as planned, the analyst noted. Ciarmoli pointed out that apparently the potential maintenance issue was related to the tail of the vehicle, but the recent analysis cleared the vehicle for flight and presumably this issue will be addressed as part of normally scheduled maintenance later this year.

WHAT'S NOTABLE: Virgin Galactic stock was under pressure last week after the company reported weaker than expected quarterly results and said its next spaceflight test could be delayed further due to an unexpected possible maintenance issue with carrier aircraft VMS Eve. Following the news, both Credit Suisse and Susquehanna lowered their price targets on the shares.

"Our next maintenance cycle is planned for later this fall. And prior to Eve's last flight, all inspections confirmed our schedule was on track. However, following this last inspection, we identified an item on our maintenance calendar that needs further study to determine whether we need to take action now instead of the fall as planned. Because this issue just emerged at the end of last week, we are still determining what steps may be necessary to address it. While this may impact our flight test schedule, I want to emphasize that this is the nature of a test flight program and we are going to take the time we need before moving forward," Michael Patrick Moses, President of Space Missions & Safety, explained during Virgin Galactic's earnings call.

PRICE ACTION: In Thursday morning trading, shares of Virgin Galactic have gained over 11% to $19.22.