By Brian Lantier, CFA
NASDAQ:HOVR
READ THE FULL HOVR RESEARCH REPORT
New Horizon (NASDAQ:HOVR) Aircraft made progress toward several of our 2026 milestones, including further strengthening of the balance sheet, increased R&D investments, operating cost control, and continued expansion of the company's technical talent.
The company continues to access the capital markets when market conditions are appropriate. During the quarter, the company sold another 2.6 million shares for net proceeds of roughly CAD 10.8 million. This share sale, combined with shares issued upon warrant exercises and shares issued to cover professional services, increased the total share count to 44.3 million. The company still has more than $31 million (USD) of availability under its at-the-market sales agreement.
While management did not disclose any new manufacturing partnerships, the company reminded investors of the long history of Aerospace innovation and manufacturing in Canada. It noted that it would make sense for an emerging company like Horizon to speak with all of the leading Canadian Aerospace firms. Given that most of 2026 will be focused on activity going on "behind the scenes," mainly building the full-scale prototype and testing subsystems, strategic partnerships with any leading aerospace companies could be the most significant market-moving events for the company in the near term, so investors should keep an eye on this in 2026.
VALUATION TARGET
The late-summer frenzy in eVTOL stocks like Horizon Aircraft has receded as investors have begun to realize that, while the opportunity is significant in this market, it will be a lengthy and complex path to commercialization. Horizon's shares have been more volatile than those of larger companies in the sector, as many retail investors seek the next big thing. Relatively minor news items often trigger sharp spikes in message volume on Horizon Aircraft in many penny stock forums. Over time, we anticipate the investor base will have a longer time horizon, but in the interim, investors in Horizon Aircraft will need to be aware that the stock is prone to significant swings that are often unrelated to the company's underlying fundamentals.
Joby continues to trade at prices 25-30% above the average target prices established by covering analysts, so this premium remains attached to many comparable stocks in the sector, including Horizon Aircraft.
We have maintained our DCF model's discount rate at 17%, adjusted our initial sales from 2030 to 2031, and increased our market penetration assumptions in 2034. Our 12-month target price for the shares is unchanged at $3.25, representing more than 50% upside from the current price. Given the stock's past volatility, we expect the shares could trade in a wide range around our target over the coming months. We would encourage long-term investors to tactically add or reduce exposure when prices reach extremes.
We encourage investors to read our full report for additional insights on the eVTOL industry and Horizon’s position in this market.
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