Shares of companies involved in the development of electric vertical take-off and landing (eVTOL) aircraft have experienced significant declines due to the recent market downturn. Nevertheless, an investment bank has indicated that shares of EHang Holdings, trading under the symbol EH, may have been overly affected by these market conditions.
EHang’s stock surged by up to 13% on Monday and maintained an 8% increase by 1:30 PM ET following an upgrade to a buy rating by Deutsche Bank.
EHang, based in China, is among several start-ups aiming to bring eVTOL technology to market. This technology represents a hybrid approach, combining the vertical take-off capability of helicopters with the steadiness of small airplanes. These battery-powered aircraft are being developed as a more efficient transit option to circumvent urban traffic congestion and seamlessly link passengers to larger aircraft.
The ongoing market sell-off has significantly impacted speculative stocks, resulting in a 40% decrease in EHang’s stock value since February. Deutsche Bank analyst Edison Yu considers this decline to be an overreaction and has upgraded EHang’s rating from hold to buy. Yu perceives the current market situation as an advantageous entry point, noting that China is at the nascent stage of nurturing eVTOL technology. While the analyst adjusted the price target from $22 to $20, this new target still stands nearly 30% above the current trading price of the stock.
While all eVTOL stocks remain speculative due to the industry’s early developmental phase, EHang is positioned as a frontrunner among a limited number of companies. According to the Deutsche Bank analyst, China’s regulatory framework seems supportive of this emerging technology. For investors willing to endure short-term volatility, EHang might present an appealing option within a well-diversified investment portfolio.
