On Tuesday, Archer Aviation Inc. (NYSE: NYSE:ACHR) maintained its Buy rating and $9.00 stock price target from Canaccord Genuity. This affirmation follows the announcement that Stellantis has invested the remaining $55 million available through their equity forward purchase agreement into Archer Aviation.
Stellantis had committed up to $150 million in January 2023, with subsequent investments made throughout the year and additional open market purchases amounting to approximately 8.3 million shares as of March 2024.
Archer Aviation credited the latest investment to the achievement of a significant milestone— the completion of the full-transition flight with its full-scale Midnight electric vertical takeoff and landing (eVTOL) prototype in June. The company also noted the ongoing progress of its 350,000 square foot serial manufacturing plant in Covington, GA, which is on track to be completed by the end of the year.
The sustained Buy rating and price target are reflective of the confidence in the partnership between Archer Aviation and Stellantis, especially after the successful full-transition flight of the Midnight eVTOL prototype.
This milestone builds upon the previous full-transition flight conducted by the smaller Maker prototype in 2022. The investment by Stellantis is seen as a positive reinforcement of its commitment to the development of Midnight.
Canaccord Genuity's optimism is further bolstered by the progress of Archer's manufacturing facility in Georgia, which is advancing towards operation. The analyst firm notes that while additional equity offerings are anticipated before Archer Aviation secures an FAA type certificate and commences commercialization of the Midnight, the financial backing from Stellantis enhances the company's liquidity as it continues flight testing in California.
The price target of $9.00 set for Archer Aviation's stock is based on a discounted cash flow (DCF) analysis extending through 2035. This valuation reflects the firm's long-term outlook on the company's growth potential in the evolving eVTOL market.
In other recent news, Archer Aviation Inc. has made significant progress with its Midnight eVTOL aircraft. The aircraft completed a key transition flight, marking a major step towards commercial viability. Archer also secured a Part 135 Air Carrier & Operator Certificate from the Federal Aviation Administration, allowing the company to commence commercial operations.
In financial developments, Archer reported a strong first quarter in 2024, exceeding flight test goals for its Midnight aircraft and maintaining liquidity of approximately $523 million. Canaccord Genuity maintained a Buy rating on Archer Aviation, highlighting the company's business model and international expansion.
Archer also announced a joint venture with KakaoMobility, aiming to integrate Archer's Midnight aircraft into Kakao T for air taxi flights starting in 2026. Stellantis N.V. (NYSE:STLA), a major automaker, increased its investment in Archer, contributing to the development of Archer's eVTOL aircraft.
Archer made amendments to its corporate charter following its Annual Meeting of Stockholders, reflecting the company's commitment to aligning its operations with shareholder interests and legal standards. These developments are part of Archer's continuing collaboration with the FAA and its progress towards introducing innovative urban air mobility solutions.
InvestingPro Insights
As Archer Aviation (NYSE: ACHR) garners a sustained Buy rating and a positive outlook from Canaccord Genuity, it's worth noting some key financial metrics and considerations for investors. According to InvestingPro, Archer Aviation holds more cash than debt on its balance sheet, which is a solid indicator of the company's financial stability. Moreover, the firm's liquid assets exceed its short-term obligations, providing a cushion for near-term financial commitments.
Still, there are challenges ahead. Archer Aviation is quickly burning through cash and has not been profitable over the last twelve months. The company's stock price has also been quite volatile, with significant declines over the last three to six months. These factors underscore the importance of closely monitoring the company's cash flow management and market performance.
For investors seeking a more in-depth analysis, there are additional InvestingPro Tips available, including insights on the company's gross profit margins and free cash flow yield. Discover these and other valuable tips by visiting https://www.investing.com/pro/ACHR. Remember to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. In total, there are 11 detailed InvestingPro Tips available for Archer Aviation, which can guide investors in making more informed decisions.
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