Archer Aviation (NYSE:ACHR) is pursuing what is almost a comic book endeavor. That is, it is in the business of flying taxis, or as they are more formally known: eVTOLs (electric vertical take-off and landing) aircraft.
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While these vehicles have yet to fill the skies, the vision of flying taxis is inching closer to reality. Companies are aiming to launch commercial passenger flights as early as next year.
Investors have been warming to the theme in recent months, with ACHR considered a major player in the space. To wit, over the past six weeks, the stock has surged by over 180%.
There was further good news for investors on Thursday when the company showed that its products could be much more than just flying taxis. Archer announced that it had signed an exclusive partnership with Anduril Industries, a cutting-edge defense contractor, to create an unmanned hybrid VTOL aircraft designed for critical defense operations. The collaboration will act as the cornerstone of Archer’s new business segment, Archer Defense, which aims to develop the hybrid VTOL aircraft and compete for a significant Department of Defense (DoD) program of record.
Canaccord analyst Austin Moeller thinks the timing of the deal could be just right for Archer.
“[The] announcement fits perfectly with the Trump Administration’s near-term strategy of leveraging America’s dominant tech sector to rapidly deploy cutting-edge, commercialized technologies on the battlefield to maintain overmatch against near-peer adversaries like China and Russia,” the analyst explained.
Both Trump and Elon Musk have voiced support for expanding drone use in combat and logistics over traditional manned aircraft. In typical fashion, Musk recently criticized the F-35 program on X, calling it “obsolete in the age of drones,” and that it is being run by “idiots” and endangers pilots. Meanwhile, Trump shared a video promoting growth in the U.S. VTOL aircraft industry to counter China’s dominance.
“It is apparent that Archer management is leaning in on the entrepreneurial characteristics of the new Administration, particularly with FAA Administrator Mike Whitaker announcing his resignation as of January 20th,” Moeller went on to say.
In fact, Moeller believes the OEM sales and aftermarket support potential in the VTOL drone market could represent a much bigger TAM (total addressable market) and share of customer spending than OEM aircraft sales for urban air mobility.
To help its partnership with Anduril and the launch of Archer Defense, the company raised another $430 million in equity via a private placement at $6.65 per share. This, says Moeller, “solidifies Archer’s position as one of the sector’s best capitalized eVTOL manufacturers.”
As such, with an “attractive new opportunity” in tow, Moeller raised his price target from $8.5 to $11, suggesting the shares will gain 31% in the year ahead. Moeller’s rating stays a Buy. (To watch Moeller’s track record, click here)
Wall Street analysts share a bullish outlook, with 5 Buys against 1 Hold, culminating in a Strong Buy consensus rating. The average price target of $11 points to an expected 12-month return of 21%. (See ACHR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
