Electric-powered aircraft maker Archer Aviation (NYSE: ACHR) has captivated investors with the potential to bring air taxis to everyday life and potentially ease traffic congestion that plagues many cities. The company’s stock has captivated Wall Street, garnering many favorable ratings and price targets.
One Wall Street analyst just initiated coverage and sees the potential for Archer Aviation’s stock price to more than double, despite trading down nearly 19% so far this year. Let’s take a look.
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Needham analyst Chris Pierce recently rolled out coverage of Archer Aviation with a buy rating and $11 price target. That target implies a 121% upside over the next year or so given that the stock currently trades at $4.98 per share (as of Nov. 20).
Pierce acknowledges that the timing of getting aircraft taxis and the network up and running is uncertain, but also says that momentum for air taxis is very much real. This gives him confidence that the company can get to where it needs to be.
Pierce values the revenue opportunity for early-stage air taxis at $3 billion, conservatively based on the movement gaining a modest market share of airport and commuter travel. He sees a “compelling use case” and a “long duration story, but shorter-term catalysts (regulatory approvals, first passenger flights) should drive increased confidence in the longer-term opportunity.”
Archer is the second U.S. air taxi company to receive initial airworthiness criteria from the Federal Aviation Administration (FAA). In September, the company completed 400 test flights and the FAA issued a final rule for advanced mobility aircraft. The regulatory environment should become more favorable for Archer with the incoming Trump administration.
Ultimately, I agree with Pierce that the stock is compelling at these levels. Uncertainty in navigating the skies makes Archer a high-risk, high-reward opportunity. However, if Archer obtains the necessary approvals and gets operational, it will have a sizable lead over competitors and should be able to grab significant market share.
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