Joby Aviations shares sink after JPMorgan downgrades to Underweight

Investing.com -- JPMorgan (NYSE:JPM) downgraded Joby Aviation (NYSE:JOBY)'s stock to Underweight from Neutral, while slightly lifting its December 2025 price targe from $5 to $6.

This adjustment reflects higher projected sales multiples and modestly improved long-term estimates based on the assumption that more aircraft will be sold directly as consumer adoption grows. Despite the price target hike, the new target still suggests a 37% downside from current stock levels.

Joby shares fell more than 6% after Friday's market open. 

JPMorgan acknowledges Joby Aviation as a frontrunner in the emerging electric vertical takeoff and landing (eVTOL) industry, with significant progress demonstrated, including the commencement of for-credit testing and strategic partnerships such as the one with Toyota (NYSE:TM).

However, the firm advises caution, noting that the stock's current valuation may be overly optimistic, having surged significantly in the past six months alongside other Clean Tech stocks like Archer Aviation Inc (NYSE:ACHR), outpacing the S&P 500's growth.

Archer stock was also downgraded to Neutral from Overweight, sending its shares sliding more than 10% on Friday.

“We think it is time for an “altitude adjustment” with current performance rocketing ahead of fundamentals,” analysts led by Bill Peterson said in a note.

“Stocks began to inflect in the month leading up to the election and have sustained the outperformance over the rest of Clean Tech since the Trump victory, likely seen as a speculative tech beneficiaries aligned with the likes of retail favorites such as Tesla (NASDAQ:TSLA) and Rocket Lab.”

This trend is supported by continuous retail inflows into Joby and Archer Aviation, similar to what was observed from June to August 2023, which was followed by a market correction.

JPMorgan suggests that the current stock prices for eVTOL companies may be prematurely factoring in successful type certification.

Despite anticipated deregulation under the Trump administration, which may streamline the FAA regulatory process, JPMorgan believes that the majority of the certification work remains in the hands of the companies, which are expected to maintain strict safety and testing standards to mitigate reputational risks in a still-developing market.

For Joby, JPM analysts expect downside in the coming quarters “and would similarly look for a better entry point,” they noted.