Why Shares of Archer Aviation Took Flight This Week

Since the close of trading last Friday, shares of the electric aircraft company Archer Aviation (NYSE: ACHR) had risen close to 18.5%, as of 1 p.m. ET on Thursday. The company continues to progress toward its goal of commercializing air taxis, and also received a bullish research note from a Wall Street analyst.

Momentum continues to build for air taxis

Archer Aviation has seen its stock decline about 12% this year, but Needham analyst Chris Pierce says to ignore the noise and "load up" on the stock because the company continues to make strong progress toward launching its Midnight electric aircraft for commercial use in what could prove to be a sizable market opportunity. Pierce maintained a buy rating on the stock and a $13 price target.

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Pierce cited two recent industry events that give him confidence about Archer's future. First, the company recently let the public see its Midnight electric aircraft at an event in Manhattan, with prominent officials from United Airlines and the New York City Economic Development Corporation in attendance. Pierce also attended a conference with Archer and the other two air taxi players. He came away thinking that regional airports have significant interest in leveraging air taxis.

"We're bullish on electrification driving increased regional airport usage, replacing a wide swath of inefficient and environmentally damaging 2-6 hour road trips done in ICE vehicles," Pierce wrote in a research note.

In other news, Archer also announced plans to set up an air network between Manhattan and metropolitan New York airports. The company is also making progress on setting up a network in the United Arab Emirates (UAE). The General Civil Aviation Agency (GCAA) recently approved a proposal by Archer and Falcon Aviation to make the Abu Dhabi Cruise Terminal helipad into a hybrid heliport that can be used for air taxis.

It's hard not to be bullish

Given the regulatory progress made by Archer and enthusiasm around commercial air taxis, it's hard not to be bullish on the company and stock. After all, with only two other competitors, it's going to be a first mover in what could be a massive market. Given traffic and environmental concerns, electric air taxis certainly have merit. If you choose to buy, just keep in mind that Archer is still pre-revenue and trades at over a $4.5 billion market cap when sizing your position.

Bram Berkowitz 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.