Joby Aviation (JOBY 12.83%) stock posted big gains in Tuesday's trading. The flying-taxi specialist's share price ended the daily trading session up 12.8%. Meanwhile, the S&P 500 (^GSPC 0.40%)and the Nasdaq Composite (^DJI -0.28%) index closed out the day's trading up 0.4% and 0.28%, respectively.

Joby's valuation climbed today after Needham initiated coverage on the stock with a buy rating and a one-year price target of $8 per share. Even after today's gains, the firm's price target suggests near-term upside of roughly 26%.

Needham thinks Joby is the early leader in flying taxis

In its initiation of coverage on Joby, Needham said that it viewed the company as being the likely winner in the race for early share in the flying taxi market. Needham views Joby's partnership with Uber as a key competitive advantage, and it also has a favorable view on the company's ElevatOS software platform.

Notably, Needham also initiated coverage on Archer Aviation with a bullish rating today. Archer is one of Joby's most high-profile competitors in the flying-taxi space, but Needham clearly doesn't view the market as a winner-take-all category.

What comes next for Joby Aviation?

Joby's business is still in a pre-revenue state, and the company is still getting key pieces in place to move forward with commercialization. Despite the business being in a relatively nascent state, the flying-taxi specialist has a market cap of roughly $4.8 billion. Crucially, the company still needs to secure authorization from its vehicles from the Federal Aviation Administration (FAA) and other regulatory agencies in other countries where it plans to market its flying taxis.

Getting approval from the FAA and other regulators in key markets is central to the bull thesis on Joby Aviation stock. The outlook on the regulatory front has actually been looking quite promising, and Needham is broadly bullish on the evolving regulatory climate in the space. Joby has a highly growth-dependent valuation, but its stock could see significant gains in conjunction with favorable regulatory developments and progress for commercial deployment.