Sign InArcher Aviation Inc. (ACHR) Stock Analysis: Potential Undervaluation and Caution on Profitability
Summary
Archer Aviation Inc. (ACHR) is a company in the eVTOL sector, with its stock showing a drop but also positive technical indicators and high trading volumes, while fundamental analysis reveals the company's lack of profitability and negative EPS.
Introduction
Archer Aviation Inc. (ACHR), listed on the NYSE, is an organization active in the thriving eVTOL (Electric Vertical Take-Off and Landing) sector, often referred to as flying cars. This report provides a comprehensive technical and fundamental analysis of ACHR's stock, including some latest news references.
Technical Analysis
ACHR's last close was $5.78 on August 25, 2023, showing a drop of approximately 12% ($-0.78). The stock experienced a low of $5.62 and a high of $6.67 during the trading day. The price exhibits support at $5.77 and resistance at $6.56.
The 14-day Relative Strength Index (RSI) stands at 52, suggesting a balance between buying and selling pressures. The MACD (3-month) is 0.50, which suggests positive momentum. On a moving average basis, ACHR is trading above its 50-Day ($5.11), and 200-Day ($3.19) moving averages, indicating a bullish medium-long term trend.
Trading volumes are skyrocketing, with the last session reaching 19.82 million trades, considerably higher than the average volume of 8.13 million, indicating higher investor interest.
Fundamental Analysis
The company has a market capitalization of $1.48 billion, with 255.74 million shares outstanding. Their recent earnings per share (EPS) was -$2.02, with a negative Price/Earnings (P/E) ratio of -2.86, reflecting the company's inability to generate profits.
The recent consensus on ACHR hints at a "Buy" rating, with 2 'buy' recommendations and 1 'hold'. Analysts' target low, high, median, and consensus price targets stand at $4.
News Analysis
Recent news articles highlight the potential of eVTOLs, referring to them as the future of commuting and potential 'millionaire-maker' stocks. The market is upbeat on the industry, expecting stellar returns in the long term.
That said, a news article does mention that shares of Archer Aviation are considered risky due to lack of revenue and profit margin, a sentiment reflected in the company's negative EPS and P/E ratio.
DCF Analysis
The Discounted Cash Flow (DCF) analysis yields a value of $6.07. This suggests potential undervaluation, given the last closing price of $5.78, and may indicate a good entry point for investors.
Predictions for Next Trading Day and Week
Based on the technical analysis, increased trading volumes, and positive sentiment in the news, ACHR's stock might rebound on the next trading day, August 28, 2023. However, due to the industry's speculative nature and the company's financials, this comes with a higher degree of risk. For the upcoming week, if the buying momentum continues, the stock may encounter resistance at $6.56.
Stock Evaluation: HOLD
Despite the positive market sentiments regarding the eVTOL industry and ACHR's bullish long-term trend, the company's current lack of profitability compels caution. Adding to this is the market's speculative nature which could lead to significant price volatility. As a result, the evaluation for Archer Aviation Inc. (ACHR) is to 'Hold'. Risks should be properly managed and investors should await clearer signs of profitability before committing further.
