Archer Aviation (NYSE:ACHR) stock has captured Wall Street’s attention, raising the question: could flying taxis be the next big trend to take off?
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Judging by the recent price action, many investors seem to think so. Shares of the eVTOL (electric vertical takeoff and landing) aircraft maker had been on a huge surge before experiencing a pullback this week. Despite the recent dip, the stock remains up by 108% over the past month.
Maybe it’s best to keep expectations in check here as Archer remains a highly speculative play, considering the company has yet to achieve the basic requirement of any company: generating revenue. With flying taxis still a concept rather than a commercial reality, Archer is in the pre-revenue stage.
“Yet,” though, is the key word here, because the prospect of making bank is closer than at any point so far. Apart from some very appealing points – backing of auto giant Stellantis, a $6 billion order book, deals with United Airlines and the UAE, a U.S. Air Force contract, and a favorable stance from the FAA – Archer is nearing completion of Phase 3 in type certification for its Midnight eVTOL and progressing through Phase 4. Key audits of supplier-developed and internal software are finished, with 12% of compliance documents accepted by the FAA. The company has also emphasized that its 6,500 lb production-series aircraft – importantly, not a pre-production prototype – is already rolling off the line. Next year, Archer plans to continue flight trials, including hover-to-cruise transitions, deploy test aircraft for demos in key markets like the UAE and the U.S., and actually provide operational aircraft for customer flights in Abu Dhabi.
So, is it worth taking a punt here? Canaccord analyst Austin Moeller certainly thinks so, pointing out several reasons for getting behind this name.
“Archer continues to expand its backlog with key customers in major launch markets (US, UAE, Japan), and its backlog is now above $6B (or 1,200+ eVTOL units),” Moeller explained. “We believe that Archer is getting within striking distance of its type certification, and has blazed a trail towards obtaining the certificate in the 2025-2026 timeframe, in our view.”
Additionally, despite the administration change, management is confident in the $148 million upsized program funding from the US Air Force’s Agility Prime. The company has also noted that a major defense contractor is assessing the aircraft’s potential to integrate various defense and intelligence payloads for upcoming program bids.
Accordingly, Moeller rates ACHR shares as a Buy, backed by an $8.5 price target. The implication for investors? Upside of ~26% from current levels. (To watch Moeller’s track record, click here)
Turning now to the rest of the Street, where an additional 2 Buys and 1 Hold provide the stock with a Strong Buy consensus rating. The average price target stands at $9.38, a figure that makes room for 12-month returns of ~39%. (See ACHR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
