Deutsche Bank has set a bullish $12 price target for Archer Aviation Inc (NYSE:ACHR), a manufacturer of electric vertical takeoff and landing (eVTOL) vehicles. This optimistic outlook contributed to a second consecutive day of gains for the company's stock. The bank's positive stance is underpinned by Archer's robust cash position and ongoing progress in securing Federal Aviation Administration (FAA) approval for its Midnight electric aircraft.
Archer Aviation's shares saw a notable 4.6% increase on Tuesday, following the endorsement by Deutsche Bank analysts. The price target suggests a substantial 140% upside, building on an already impressive 167% surge in the stock price throughout 2023.
The company's third-quarter results, released last Friday, revealed a liquidity reserve of $600 million. Despite reporting a $52 million loss and $444 million in GAAP losses for the quarter, CEO Adam Goldstein remains confident. Backed by S&P Global Market Intelligence data, Goldstein believes that Archer's total cash reserves of $670 million, bolstered by new stock issuance, will sustain operations until 2025.
Archer Aviation has already secured a significant contract with the U.S. Air Force worth $140 million for 600 units of its Midnight model. In addition to this defense contract, the company is also working with United Air Holdings to develop airport-to-city center routes, demonstrating its commitment to commercializing eVTOL technology.
Despite these developments and the recent bullish sentiment from Deutsche Bank, Archer's stock has faced challenges over the past quarter, with a decline of 13.5%. Investors are advised to watch for significant options activity in the near future as short interest in ACHR exceeds 29.5%.
While Archer maintains a "Moderate Buy" rating among top analysts, there is an acknowledgment of potential stock volatility. The forecasts suggest that while the company may not achieve free cash flow positivity until 2030, it should reach revenue sufficiency after 2025. As such, investors are keeping a close eye on the company's strategic moves and market performance amidst preparations for their commercial launch and anticipated higher operating costs.
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