Archer Aviation (ACHR), a favorite of Ark Invest’s Cathie Wood, is falling further in the wake of an analyst downgrade.
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The stock fell over 7% on Monday, January 13th, taking its five-day drop to more than 23% after JPMorgan (JPM) analyst Bill Peterson cut his rating to Hold (Neutral) from Buy (Overweight) following a bumper rally that left shares looking overvalued.
ACHR, an electric vertical take-off and landing (eVTOL) aircraft developer, is a top ten holding in the ARK Innovation ETF (ARKK), with the Cathie Wood-managed firm loading up on shares recently.
ACHR Flying Too High for Analyst
JPM’s Peterson cut the stock to Hold from a Buy whilst upgrading his price target on to $9 from $6, reflecting the 168% rally it has enjoyed in the last three months.
While the stock is “marginally more de-risked than 2023”, the analyst thinks the fundamental story remains unchanged and the outcome for the shares is largely binary, hinging as it does on securing certification for its eVTOL aircraft.
ACHR and fellow eVTOL maker Joby Aviation (JOBY) are trading like they have already received “type certification” from the Federal Aviation Administration, he said.
Canaccord Genuity analyst Austin Moeller was more upbeat last week, raising his price target on ACHR to $14 from $11 while maintaining a Buy rating.
ACHR Options Flow Turns Negative
After slipping to a six-week low last week, Ortex-reported short interest in ACHR has increased again amid the broader market pullback. The percentage of the free float which is short, which can indicate how confident Wall Street is that a stock might fall soon, is up from 22.7% to 24.6%, a two-week high in the wake of the stock’s 14% rout on Friday.
Is ACHR a Good Stock to Buy?
Overall, Wall Street has a Strong Buy consensus rating on ACHR stock, based on six Buys, two Holds, and no Sells. The average ACHR price target of $11.38 implies about 33% upside potential from current levels. Shares of ACHR have increased by almost 175% in the last three months.
