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Goldman Sachs jumped into the ratings game on the eVTOL sector. The firm started off coverage on BETA Technologies (BETA) with a Buy rating, launched coverage on Archer Aviation (ACHR) and Eve Holding (EVEX) at Neutral, and slotted Joby Aviation (JOBY) at Sell in its initial look.
Analyst Anthony Valentini highlighted that advancements in technology and the current administration’s desire to return manufacturing back to the U.S. provide increased visibility into certification timelines for the eVTOL industry. “Competition is fierce, but we don’t see a winner takes all market. We prefer aftermarket rich models that are vertically integrated, have visibility into revenue generation, and have the capacity to meet significant future demand,” wrote..
Goldman Sachs’ breakdown by eVTOL stock is below.
BETA (Buy rating): “Its stepwise approach to certification with its CTOL aircraft brings forward revenue and accelerates the learning curve without sacrificing the EVTOL timeline. BETA is an aircraft OEM and parts supplier, the most attractive business model in aviation. It has partnered with GE to build a hybrid vehicle for defense and has taken a team approach to selling motors and chargers to competitors, which will help it scale.” We believe BETA is best positioned, and the recent selloff provides an attractive entry point. We initiate at Buy.
JOBY (Sell rating): “JOBY is the oldest company in the space with the most flight hours and a lead in certification. It is focused on being a one-stop shop (OEM, supplier, operator), which means it has the largest market opportunity, but we believe the operator model will have regulatory hurdles and significant capital requirements… The stock trades at a significant premium, which we don’t believe is justified.”
ACHR (Neutral rating): “The company’s approach to outsourcing has accelerated its certification despite being in existence for fewer years than competitors. Its aircraft’s size may mean it is the most capable. However, its lack of vertical integration means less aftermarket, and we believe lower margins. Its partnership with Anduril could prove to be the best defense offering in the industry, but without visibility into funding, it is difficult to underwrite.”
EVEX (Neutral rating): “Embraer’s controlling ownership stake is attractive because it brings labor, facilities, and aviation industry expertise. However, the structure has caused the company to move more slowly and has resulted in fewer flying hours. We believe the company will compete in the market eventually, but it is behind in regard to certification.”
