Electric aircraft manufacturer Archer Aviation (NYSE: AHR) attracted investors with the potential to bring air taxis into everyday life and potentially ease the traffic jams plaguing many cities. The company’s shares have attracted Wall Street, earning many positive ratings and price targets.
One Wall Street analyst recently started 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 launched coverage on Archer Aviation with a buy rating and a $11 price target. That target represents a 121% upside over the next year or so given that the stock is currently trading at $4.98 per share (as of Nov. 20).
Pierce admits that the time frame for air taxis and the network is uncertain, but he also says that the momentum for air taxis is very real. This gives him confidence that the company can get to where it needs to be.
Pierce estimates an air taxi revenue opportunity of up to $3 billion, carefully based on an effort to gain a small market share for airport and passenger travel. He sees “a compelling consumption situation” and “a long-term issue, but short-term catalysts (regulatory approvals, first passenger flights) should drive growing confidence in the long-term.”
Archer is the second US air taxi company to receive initial airworthiness certification from the Federal Aviation Administration (FAA). In September, the company completed 400 test flights and the FAA issued a final rule for commercial airliners. The regulatory environment should be more attractive to Archer with the incoming Trump administration.
Ultimately, I agree with Pierce that the stock is compelling at these levels. The uncertainty in navigating the skies makes Archer a high-risk, high-reward opportunity. However, if Archer gets the necessary approvals and goes live, it will have a big lead over its competitors and should be able to capture significant market share.
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