Goldman Sachs Group, Inc. enters the eVTOL race: Supports BETA Technologies and is bearish on Joby Aviation.

Goldman Sachs Group, Inc. has started stock rating business in the electric vertical takeoff and landing aircraft (eVTOL) industry. The company gave BETA Technologies (BETA.US) a "buy" rating in its initial assessment, gave Archer Aviation (ACHR.US) and Eve Holding (EVEX.US) "neutral" ratings, and rated Joby Aviation (JOBY.US) as "sell". Analyst Anthony Valentini pointed out that advancements in technology and the current government's desire to bring manufacturing back to the United States have increased visibility on the eVTOL industry certification timeline. "Competition is fierce, but we believe this is not a winner-takes-all market. We prefer business models that generate strong aftermarket profits, vertical integration, revenue visibility, and the ability to meet future huge demand." Here is Goldman Sachs Group, Inc.'s specific analysis of each eVTOL stock: BETA Technologies (buy rating): "Its staged certification process with CTOL aircraft can generate revenue early and accelerate the learning curve without impacting the eVTOL timeline. BETA is both an aircraft manufacturer (OEM) and a parts supplier, which is the most attractive business model in aviation. It has collaborated with GE Aerospace (GE) to develop a hybrid-powered aircraft for defense and is teaming up with competitors to sell motors and chargers, which will help it scale up. We believe BETA is best positioned, and the recent drop in stock price provides an attractive entry point. We rate it as a buy." Joby Aviation (sell rating): "Joby is the oldest company in this field with the most flight hours and is ahead in certification. It aims to be a one-stop service provider (covering manufacturing, supply, operations), which means it has the largest market opportunity, but we believe its operating model will face regulatory hurdles and huge capital requirements... The stock is currently trading at a significant premium, which we believe is unreasonable." Archer Aviation (neutral rating): "The company's outsourcing approach has accelerated its certification process, despite being established later than competitors. The size of its aircraft may mean it has the strongest performance. However, its lack of vertical integration means lower aftermarket profit, and we believe its profit margin is also lower. Its partnership with Anduril could make it the best defense product in the industry, but its lack of funding visibility makes it difficult to assess its value." Eve Holding (neutral rating): "The majority stake by Embraer is attractive as it brings labor, facilities, and expertise in the aviation industry. However, this structure has led to a slower growth rate and fewer flight hours. We believe the company will eventually compete in the market, but it lags behind in certification."