Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 24 Jun, 24 | ACHR | Speculative Buy | USD 3.66 | USD 4.0 | USD 4.65 | 11 days | 27.0% |
Data Powered by EOD Historical Data (“EODHD”).
Archer Aviation Inc., an urban air mobility company, engages in designs, develops, manufactures, and operates electric vertical takeoff and landing aircrafts to carry passengers. The company was formerly known as Atlas Crest Investment Corp. and changed its name to Archer Aviation Inc. Archer Aviation Inc. was incorporated in 2018 and is headquartered in San Jose, California.
Increased Liquidity: Current Ratio of 6.01x in Q1FY24 vs Industry Median of 2.07x.
Optimized Leverage: Financial Leverage of 1.35x in Q1FY24 vs. Industry median of 2.19x.
Increased Expenses: Operating Expenses rose to USD 142.20 mn in Q1FY24 from USD 112 mn in Q1FY23.
Widening Losses: Normalized EBITDA stood at a loss of USD 140.10 mn in Q1FY24 vs. loss of USD 111.10 in Q1FY23.
Inflation, Operational Capacity, Demand of Contracts, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 3.66 | 2.8 | 4.0 | 4.65 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Midnight’s Flight Test Campaign Accelerates – Closing in On Transition Milestone: In Q1, Archer conducted over 100 flights, positioning the company to exceed its annual goal of 400 flights. Midnight is nearing its crucial transition milestone, where it will take off vertically, accelerate until it transitions from thrust-borne to wing-borne flight, and then land vertically. Following this milestone, the aim is to fly the aircraft 10-15 times per day, advancing closer to the commercial mission tempo.
Midnight’s Key Systems Pass Rigorous Testing Ahead of “For Credit” Testing: Midnight’s key systems have successfully passed rigorous testing, ensuring flight readiness for the upcoming piloted flight tests later this year. This step is critical for the ongoing FAA certification program, which underpins the safety of Archer's flight operations.
Final Assembly of First Conforming Midnight Aircraft Rapidly Progressing: Significant progress has been made in the final assembly and integration of Midnight's components and systems. Archer is on schedule to begin piloted flight tests later this year. Recently, the company completed its new battery pack manufacturing line and provided an exclusive tour of the Integrated Test Lab and Manufacturing Facility, where these aircraft are being constructed.
Multi-Hundred Million Dollar Framework Agreement To Build the Future of Air Travel in the UAE: Archer has signed a multi-hundred-million-dollar framework agreement with the Abu Dhabi Investment Office to expedite the development of commercial air taxi operations across the UAE. This strategic partnership marks a significant step towards building the future of air travel in the region.
Continuing To Maintain a Strong Liquidity Position: Archer has consistently maintained over USD 520 million in liquidity at the end of each of the past four quarters. This financial strength enables continued investment in the aircraft development program, supporting the planned commercial launch while maintaining a robust liquidity position.
First Quarter 2024 Financial Results
GAAP Results for Q1 2024: For the first quarter of 2024, Archer reported total operating expenses of USD 142.2 million. The net loss for the quarter was USD 116.5 million.
Non-GAAP Results for Q1 2024: On a non-GAAP basis, total operating expenses for Q1 2024 were USD 89.1 million. Adjusted EBITDA for the same period stood at USD (86.8) million. The company-maintained cash and cash equivalents totaling USD 405.8 million.
Second Quarter 2024 Financial Estimates: Archer has projected its financial estimates for the second quarter of 2024. The company anticipates non-GAAP total operating expenses to range between USD 80 million and USD 95 million.
Technical Observation (on the daily chart):
The Relative Strength Index (RSI) over a 14-day period stands at a value of 58.18, upward trending and forming a bullish divergence, with expectations of a consolidation or a trending reversal. Additionally, the stock's current positioning is between both the 50-period SMA and 200-period EMA, which may serve as dynamic short to medium-term support and resistance levels respectively. The price has given good upward momentum, with an important resistance around USD 4.00, with expectations of decent momentum on the upside when the USD 4 level will be broken.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Archer Aviation Inc. (NYSE: ACHR) at the closing market price of USD 3.66 as of June 21, 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Aerospace & Defense
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to EBITDA (x) | |
|---|---|---|---|---|---|---|---|---|
| ACHR Archer Aviation Inc |
-0.0332 1.10% | 3.00 | - | - | - | 5.15 | -3.2977 | |
| EADSY Airbus Group NV |
0.10 0.29% | 34.78 | 27.76 | 21.51 | 1.93 | 7.21 | 1.79 | 13.93 |
| EADSF Airbus Group SE |
1.00 0.73% | 138.00 | 27.24 | 21.28 | 1.91 | 7.14 | 1.79 | 13.93 |
| RTX Raytheon Technologies Corp |
0.49 0.40% | 123.99 | 38.65 | 15.77 | 1.77 | 1.69 | 2.22 | 16.02 |
| BA The Boeing Company |
-4.3 2.78% | 150.35 | - | 222.22 | 1.34 | - | 1.81 | 60.73 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is June 21, 2024. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.
Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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