Is Joby Aviation Wall Street’s New Darling of eVTOL?

Joby Aviation is an early standout in the rapidly evolving air taxi race, according to Morgan Stanley analysts in their first ratings report on the eVTOL developer since it went public in August.

Analyst Kristine Liwag initiated the Uber-backed startup with an Overweight rating, meaning Joby’s stock is expected to perform better in the future and beyond others in its market sector. She set a target price of $16.

The news Thursday sent the Santa Cruz, California-based company’s stocks soaring.

Joby’s competitors include Lilium, Volocopter, Hyundai, Vertical Aerospace, Airbus, Eve, and Archer Aviation, which already has reached a deal with United Airlines. Several have gone public this year, including Joby, which started listing on the New York Stock Exchange on August 11 as part of a merger with a special purpose acquisition company (SPAC), Reinvent Technology Partners. Vertical is expected to do so by the end of the year.

There’s a reason why Wall Street is so interested in eVTOL: Analysts forecast a potential market worth $1 trillion in 2040. That number could balloon to $9 trillion in 2050, Morgan Stanley said.

Others are interested in the promise of an environmentally friendly, convenient air taxi that would fly passengers over urban traffic jams.

Morgan Stanley said its positive assessment takes into consideration substantial risks, including Joby’s plan to be both an aircraft manufacturer and an airline.

The assessment also takes into account necessary FAA certification of Joby’s manufacturing process and the required certified airworthiness of its fleet, which has yet to happen. Morgan Stanley said its opinions are based on Joby’s five- to 10-year outlook.

“We expect milestones during its FAA flight testing program to drive stock price,” Morgan Stanley said.

Joby said it expects FAA certification for its first eVTOL aircraft in 2023 with commercial service expected in 2024.

Thursday’s news is just the latest in a growing list of achievements for the company.

Earlier this month, Joby partnered with NASA to conduct a two-week study to assess the aircraft’s noise footprint. At the time, Davis Hackenberg, NASA’s AAM mission integration manager, said, “NASA is proud to continue our relationship with Joby by gathering highly valuable aircraft safety and noise data that will contribute toward an aviation future that includes Advanced Air Mobility (AAM) operations.”

And in July, the company said it had reached its range target with a 150-sm flight on a single charge and announced that it has joined up with Signature Flight Support, and JetBlue to create a path to using aviation and electric credits on the carbon credit market in concert with the development of electric- and hydrogen-powered aircraft.

Its strategic partnerships include Toyota Motor Company, which has invested nearly $400 million, and Uber Technologies.