Virgin Galactic is on track to begin commercial operations next year, but future growth is already priced into the stock, Bank of America says

• In a note published Monday, Bank of America stuck to its "underperform" rating for Virgin Galactic.
• Also on Monday, Virgin Galactic announced that it would issue $500 million in fresh shares.
• BofA analysts expect that Virgin Galactic is unlikely to generate positive cash flow before 2025.

Virgin Galactic founder Sir Richard Branson has gone spacefaring, but don't confuse spectacle for substance, Bank of America analysts wrote in a note on Monday morning.

BofA stuck to its "underperform" rating for Virgin Galactic, arguing that the stock's current valuation "more than reflects fundamentals and potential growth."

The note was published as Virgin Galactic's stock price hovered around $49. The analysts set a long-term price target of $41. Shortly after publication, the company announced that it would issue $500 million in fresh shares, briefly sending the stock sliding to $41.70 before a small rebound.

BofA analysts expect that Virgin Galactic is on track to commence commercial space flights as early as the first half of 2022. Yet that should not be mistaken for a buy signal. The space-travel firm is unlikely to generate positive cash flow before 2025, according to BofA projections. The stock is also already richly valued as is, they wrote.

The bearish call comes a week after UBS issued a similar forecast, arguing that Virgin Galactic's stellar 200% run-up meant it had little upside potential left. The average analyst price target for the stock was $37.90, according to the Wall Street Journal, implying a 12% drop from Monday levels.

Virgin Galactic was trading at $42.88 as of 11:45 a.m. ET, down 12.8% so far on Monday.