Shares of Joby Aviation Inc. were knocked lower Tuesday, after Deutsche Bank analyst Edison Yu recommended investors sell, saying he believes there are “important risks being overlooked” by investors.
The electric vertical-take-off-and-landing (eVTOL) craft company’s stock
JOBY,
dropped 5.9% in afternoon trading, but had been down as much as 10% at a six-week intraday low of $4.05.
Deutsche’s Yu cut his rating to sell from hold, and slashed his stock price by 33%, to $4 from $6. That made him the only analyst, of the six surveyed by FactSet, who was bearish on the stock.
Yu wrote in a note to clients that he believes “there are important risks being overlooked by the market, and Joby’s premium valuation is too lopsided” relative to rival Archer Aviation Inc. Yu rates Archer at buy, as his $12 stock-price target implies about fourfold upside from current levels.
Joby’s stock has rallied 21% over the past three months, while Archer shares
ACHR,
have climbed 34.2% and the S&P 500 index
SPX,
has gained 1.7%.
“Operationally, 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,” Yu wrote. “The current iteration being built is referred to as a ‘Company conforming’ version and will not garner any real testing credit with the FAA even when a pilot is onboard later this year.”
Yu said Joby maintains a “healthy” cash position, but also has “the largest spending burden” given its high level of vertical integration and number of employees, which was 1,422 as of Jan. 31.
He remains positive on the eVTOL industry, so he basically recommends a “pair trade,” of buying Archer’s stock and making a bearish bet on Joby’s stock.
Joby’s market capitalization of about $2.7 billion is nearly four times Archer’s market cap of about $718 million, while neither company has recorded any revenue.
