Virgin Galactic's (SPCE) latest financing should extend liquidity into 2028 as the company aims to bring its Delta-class fleet into commercial service in 2026, Morgan Stanley said.

The transaction includes retiring about $355 million of 2.5% convertible notes due 2027, issuing roughly $203 million of 9.8% notes due 2028 and selling about $46 million of common stock.

The brokerage said in a Thursday note that the structure pushes out near-term maturity pressure. It also adds higher interest expense and dilution, leaving execution milestones, liquidity, and commercialization timing as the main signposts.

The stock has fallen about 22% versus an about 0.8% rise in the S&P 500 since the disclosure on Tuesday, and shares last closed at $3.58 on Wednesday, with a market value of about $226 million and a 52-week range of $6.81 to $2.18, according to the note.

The firm added that it continues to use a discounted cash flow framework and still expects positive adjusted earnings before interest, taxes, depreciation, and amortization in 2028 and positive free cash flow in 2029.

Morgan Stanley maintained an underweight rating and lowered its price target to $2.30 from $2.50.

Shares of the company were down more than 4% in recent trading.

Price: 3.40, Change: -0.15, Percent Change: -4.23