Al Root

Shares of Joby Aviation and Archer Aviation, makers of electric vertical takeoff and landing aircraft have flown too far, too fast.

J.P. Morgan analyst Bill Peterson believes it is time for an "altitude adjustment" for the eVTOL companies. He downgraded both stocks on Friday.

His Joby rating went to Sell from Hold, but he increased his target for the stock price to $6 from $5. He cut his Archer rating to Hold from Buy but lifted his price target for those shares to $9 from $6.

Joby stock fell 5.9% in premarket trading to $8.93 while S&P 500 futures were down 0.1% and Dow Jones Industrial Average futures were flat. Archer stock slid 3.4% to $10.12.

The price targets went up while ratings went down because of how the stocks performed lately. Coming into Friday trading, Joby shares were up about 17% year to date and up about 73% over the past three months. Archer shares were up 7% in 2025 and up about 256% over the past three months.

The "stocks began to inflect in the month leading up to the election and have sustained the outperformance over the rest of Clean Tech [sector] since the Trump victory," wrote Peterson. Both are likely seen as "speculative tech beneficiaries aligned with the likes of retail favorites such as Tesla...and Rocket Lab," he said.

He notes that recently Joby and Archer's stock-price movements have been highly correlated with Tesla and Rocket Lab. Coming into Friday trading, Tesla stock was up about 65% over the past three months. Rocket Lab shares gained about 191%.

Investors appear to believe that a new administration will be good for commercial space along with battery-powered cars and aircraft. That might be the case, but too much good news is reflected in the share prices, according to Peterson.

Joby and Archer shares "are trading as though [aircraft] type certification has already been successfully completed," he said.

Wall Street expects the Federal Aviation Administration to approve both companies' aircraft for commercial flights in 2025, allowing them to start selling the vehicles to commercial customers. Neither company is expected to be profitable this year.

Overall, about 56% of analysts covering Joby shares rate them Buy and 78% of analysts covering Archer shares rate them Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

The average analyst price target for Joby stock is about $8 a share. The average target for Archer shares is about $11.

Write to Al Root at allen.root@dowjones.com

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January 10, 2025 08:05 ET (13:05 GMT)

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