Why Archer Aviation Stock Is Soaring Today

Archer Aviation (NYSE: ACHR) stock is surging in Tuesday's trading following positive coverage from an analyst. The flying electric vehicle specialist's share price was up 15.8% as of 3 p.m. ET.

Archer is soaring today after Needham initiated coverage on the stock with a bull rating. The firm's lead analyst on the stock gave it a buy rating and set a one-year price target of $11 per share, suggesting additional upside of roughly 116% as of this writing.

Needham thinks the flying-taxi industry is ready for takeoff

Needham's Chris Pierce is bullish on Archer stock and sees the still-nascent flying taxi industry moving in a promising direction. The analyst noted that there is some uncertainty surrounding Archer's transition to commercialization and scaling of vehicle deliveries, but said he believes the industry is taking off.

Archer said it had $6 billion in preliminary orders for its vehicles at the end of the third quarter, and Pierce thinks the company can recognize more than $3 billion of those orders within the not-too-distant future even assuming a relatively conservative view of demand in airport and smaller commuter travel networks. With Archer's market cap sitting at roughly $2.1 billion, the stock could prove to be significantly undervalued at current prices if Needham's rough sales growth forecast plays out as anticipated.

What's next for Archer Aviation?

As noted in Needham's recent coverage, Archer is still in the early stages of long-term expansion initiatives. But the firm does see some significant near-term catalysts on the horizon. Perhaps most importantly, securing regulatory approval from the Federal Aviation Administration and other agencies in international markets where the company has secured orders.

If the company does receive necessary regulatory approvals in key geographic markets, its share price could see big gains above current pricing levels. Things have generally been looking promising on that front, but investors should understand that significant risk still remains.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.