Electric airplane maker Beta Technologies is down 24% since its billion dollar debut last month. Two of its bankers launched coverage Monday, and they are telling investors to climb aboard the stock.
Since Morgan Stanley and BofA Securities helped underwrite Beta's $34-a-share initial public offering on Nov. 3, the stock has fallen to a recent $26.25.
Beta expects its fixed-wing electric planes will cost 40% less to operate than their jet-fueled counterparts, says Morgan Stanley analyst Kristine Liwag in her initiation report. When its Alia CX300 flew five people from East Hampton, N.Y., to New York City's JFK Airport in June, Beta said the 90-mile trip consumed seven cents worth of electricity. A planned vertical-takeoff aircraft called the Alia A250 will be 70% cheaper to operate than a helicopter, says Beta.
The Vermont-based aircraft maker has been around since 2017, yet it is reaching public markets five years after rivals like Joby Aviation and Archer Aviation rode the fad for special-purpose acquisition companies into the stock market's blue skies.
Beta may have a lead in completing certification by the Federal Aviation Administration, says BofA analyst Ronald Epstein, because its CX300 aircraft has conventional fixed wings -- instead of the swivel-engine vertical-takeoff models under development at Joby and Archer. And before trying to shuttle passengers, Beta will make cargo flights for such customers as United Parcel Service and the pharmaceutical firm United Therapeutics.
All the electric aircraft plays are early-stage ventures with neck-craning valuations. Morgan Stanley doesn't expect Beta to see its first profit until 2030, when Liwag forecasts net income of $50 million, or 19 cents a share, on revenue of $3.4 billion.
Even after its post-IPO drop, Beta enjoys a $6 billion market cap. Liwag sees the stock returning to its $34 offering price, within a year. Her bull scenario valuation would carry the electric flier to $88. That's a lofty 10 times the revenue she predicts for 2029.
After rising 65% this year, fan-favorite Joby currently trades for 10 times the average FactSet estimate of $1.2 billion in 2029 sales. Analysts are comfortable that Joby's business is taxiing toward takeoff, but its pricey multiple has tipped Wall Street's average rating to a Sell.
The newly public Beta is picking up Buy ratings from its bankers. Let's see how those ratings hold up, if Beta shares take flight.