By Senad Karaahmetovic
Deutsche Bank analysts downgraded Joby Aviation (NYSE:JOBY) to Sell from Hold with the price target slashed to $4 per share from the prior $6.
The analysts see “important risks,” which are being overlooked by the market. They also highlighted Joby's “premium valuation”.
“Despite Joby being perceived as the leader in the industry, the developmental path of its eVTOL aircraft seems increasingly challenging to us as we think the aircraft is dealing with weight management issues,” they wrote in a downgrade note.
Furthermore, analysts remind investors about the complicated “regulatory/certification process,” which offers limited visibility. High levels of vertical integration and headcount are also listed as factors that are complicating the company’s financial situation.
“Our higher level industry view is still constructive in respect to the electrification of the sky, therefore we would advocate a pair trade of long ACHR + sell JOBY to investors seeking secular exposure to eVTOL/UAM, anticipating the valuation gap will compress over time,” the analysts concluded.
JOBY stock is down 3.5% in pre-market Tuesday.