On Friday, Canaccord Genuity maintained a positive stance on Eve Holding Inc. (NYSE:EVEX), increasing its price target to $7.00 from $6.75 while reaffirming a Buy rating. The adjustment reflects the company's strengthened financial position due to beneficial financing from the Brazilian Development Bank (BNDES) and support from its parent company, Embraer.
Eve Holding is reportedly in a better place to continue with its flight testing and certification process through Brazil's National Civil Aviation Agency (ANAC) until 2027. This progress is anticipated to lead to a subsequent secondary type certificate from the U.S. Federal Aviation Administration (FAA).
The regulatory bodies in the U.S. and Brazil are seen as preparing to become primary early markets for urban air mobility by offering streamlined regulatory procedures and favorable government-backed financing for electric vertical take-off and landing (eVTOL) manufacturers.
The company's management has indicated that the first prototype test flight is expected in the first half of 2025. Canaccord Genuity's optimism also stems from Eve's significant backlog of over 2,900 preorders, which could potentially be converted into cash through pre-delivery payments (PDPs), securing production slots for customers ahead of mass production.
The analyst's $7 price target is derived from a discounted cash flow (DCF) analysis extending through 2035, with an updated discount rate of 11.2%. This projection is based on the company's current and future financial prospects, considering the anticipated certification timeline and market positioning.
In other recent news, Eve Holding, Inc. secured a $35 million loan from Banco Nacional de Desenvolvimento Econômico e Social (BNDES) for the development of its electric vertical take-off and landing (eVTOL) project. The loan is intended for the second phase of Eve's eVTOL project, which focuses on environmentally sustainable business practices. The funds are to be utilized within a 30-month period, with repayment scheduled for December 15, 2040.
In parallel developments, Eve Air Mobility announced significant progress in its third-quarter earnings call. Despite reporting a net loss of $36 million for the quarter, the company maintains a strong liquidity position with $450 million available, sufficient for three years of operations. The company also reported record services revenue of $1.6 billion, a 30% increase, and a robust pre-order backlog of 2,900 aircraft valued at $14.4 billion.
Eve Air Mobility has completed a full-scale engineering prototype, with flight tests set to begin early next year. The company has achieved regulatory milestones with the Brazilian Civil Aviation Authority and the FAA's SFAR. Finally, the company secured financing for a Brazilian manufacturing facility, with the production of 240 eVTOLs planned. These are recent developments that highlight the company's ongoing efforts in the eVTOL market.
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