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On Monday, Cantor Fitzgerald reiterated its positive stance on Archer Aviation Inc. (NYSE: NYSE:ACHR), maintaining both an Overweight rating and a $13.00 price target for the company’s shares. Currently trading at $8.88, the stock has demonstrated remarkable momentum with a 95% return over the past year, according to InvestingPro data. Analyst Andres Sheppard expressed confidence in the company’s long-term prospects, highlighting several key partnerships as pivotal to Archer Aviation’s commercialization efforts.
Sheppard emphasized the strategic importance of collaborations with Anduril, the Department of Defense, United Airlines, and Stellantis (NYSE:STLA), noting that these alliances should facilitate operations and manufacturing, as well as expand the company’s total addressable market (TAM). The recent decision by Archer Aviation to venture into hybrid vertical takeoff and landing (VTOL) aircraft was also seen as a positive move, potentially mitigating risks, especially if the company encounters delays in obtaining Type Certification from the Federal Aviation Administration (FAA). InvestingPro analysis shows the company maintains a strong liquidity position with a current ratio of 12.07 and more cash than debt on its balance sheet, providing financial flexibility for these initiatives.
Archer Aviation’s initial focus on the United Arab Emirates (U.A.E.) for its electric VTOL (eVTOL) commercialization was met with optimism by Cantor Fitzgerald. The firm’s Launch Edition program aims to commercialize in international markets prior to FAA Certification, a strategy that could potentially accelerate revenue generation.
The analyst pointed to Archer Aviation’s indicative order book, which exceeds $6 billion, plus more than $26 million in pre-delivery payments and deposits, as an encouraging sign of the company’s market traction. The order book includes substantial orders from notable clients such as United Airlines, Interglobe, Future Flight Global, the U.A.E., and Soracle Corporation in Japan.
Sheppard also suggested that the average selling price (ASP) for Archer Aviation’s initial deliveries could surpass the previously anticipated $5 million mark. With a direct sales model prioritized over a ride-sharing approach, Archer Aviation is expected to scale up revenues more rapidly. The firm’s bullish outlook on Archer Aviation remains steadfast, as it is considered one of the most well-positioned companies in the industry.
In other recent news, Archer Aviation has made significant strides in its business developments. The company concluded 2024 with a robust liquidity position of over $1 billion, despite facing a 22% year-over-year increase in operating expenses, which totaled $380.6 million. Analysts from Benchmark, Needham, and Canaccord Genuity have all maintained a Buy rating on Archer Aviation, with Needham and Canaccord increasing their price targets to $13 and $13.50, respectively. Archer Aviation is advancing its Midnight electric air taxi and plans to deliver the first Midnight eVTOL to the UAE’s General Civil Aviation Authority later this year. The company has also introduced a "Launch Edition" program, with Abu Dhabi Aviation set to become the first Midnight operator, which is expected to facilitate early adoption of eVTOL technology internationally.
Archer’s partnership with Anduril Industries is anticipated to open opportunities beyond the defense sector due to the dual-use nature of their technology. The company plans to construct 10 Midnight aircraft in fiscal year 2025 to meet certification and early adopter demands. Despite the uncertainty surrounding FAA certification timing, Archer Aviation is proceeding with "at-risk" aircraft sales. Analysts have expressed optimism about the company’s financial future, noting its strong balance sheet and ability to secure contracts for pre-certification aircraft and hardware. The company’s strategic moves, including a partnership with Stellantis, which is expected to provide an additional $390 million, further solidify its position in the emerging urban air mobility market.
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