Tuesday, Canaccord Genuity adjusted its price target on Eve Holding Inc. (NYSE:EVEX) to $8.50, down from the previous $9.00, while maintaining a Buy rating on the stock. The firm's decision reflects recent developments including an equity raise which has introduced new investors to the company's capital structure. Notably, the equity stake of Eve's parent company, Embraer, decreased from 88.6% to 83.1% due to the offering, which was approximately 30% supported by the Original Equipment Manufacturer (OEM).
The management of Eve Holding anticipates that the revised cash balance, along with credit lines from the National Bank for Economic and Social Development (BNDES), will be sufficient to fund operations until around 2027. This expectation is based on the assumption that there will be no significant delays in the certification process by the National Civil Aviation Agency of Brazil (ANAC). The company's strategy is aimed at minimizing the risk of further dilution of equity.
Eve boasts an impressive order backlog, considered the best in the industry, with 2,900 aircraft valued at $14.5 billion. This backlog could potentially provide 30-50% in pre-delivery payments (PDPs) before low-rate initial production (LRIP) and the commercialization of its aircraft. Canaccord Genuity believes that the recent capital raise will afford Eve additional time to develop its aircraft over the coming years, despite the fact that competitors already have prototypes in flight.
The firm remains optimistic about Eve's position in the market, especially given Embraer's continued commitment to supporting the development of a mass-market electric vertical take-off and landing (eVTOL) vehicle for urban air mobility (UAM) applications. The new price target of $8.50 set by Canaccord Genuity is based on a discounted cash flow (DCF) analysis extending through 2035.
In other recent news, Eve Air Mobility, an electric vertical take-off and landing (eVTOL) aircraft manufacturer, secured $94 million in new equity financing, strengthening its position in the eVTOL market and supporting ongoing development and manufacturing efforts.
Notably, the company has reported progress in assembling its eVTOL prototype and secured non-binding letters of intent for 2,900 aircraft, valued at $14.5 billion. Despite a net loss of $25 million in the first quarter, the company ended with $223 million in cash, reflecting confidence in their liquidity. Furthermore, Eve has secured contracts for maintenance, repair, and overhaul services, potentially generating up to $935 million in revenue over five to ten years.
InvestingPro Insights
With the recent adjustments in Eve Holding Inc.'s (NYSE:EVEX) outlook by Canaccord Genuity, investors may find additional context in the company's financial metrics and market performance. According to InvestingPro data, EVEX holds a market capitalization of $883.52 million, with a negative price-to-earnings (P/E) ratio of -12.48, reflecting the company's current lack of profitability. Nevertheless, the company's balance sheet shows resilience, holding more cash than debt, which aligns with the management's strategy to minimize equity dilution risks.
InvestingPro Tips suggest caution; the stock's Relative Strength Index (RSI) indicates it is in oversold territory, and it has experienced a significant price drop over the last week, month, and year. Additionally, the stock is trading near its 52-week low, which could imply a potential entry point for investors believing in the company's long-term value proposition, particularly as the liquid assets exceed short-term obligations. For a deeper dive into EVEX's prospects and additional tips, investors can explore InvestingPro, where there are 15 more tips available. To gain access to these insights, make sure to use the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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