By Brian Lantier, CFA
NASDAQ: HOVR
READ THE FULL HOVR RESEARCH REPORT
On Thursday morning, before the market opened, New Horizon Aircraft (NASDAQ: HOVR, referred to as "Horizon Aircraft" or "Horizon") released its full-year fiscal 2026 financial results and hosted a webcast to update investors. In our view, the company has continued to advance the development of the Cavorite X7 with significant new technical relationships and well-timed capital raises that have significantly improved its position in the industry over the past year. The next major event on the "horizon" for the company will likely be revealing its completed full-scale prototype that can begin ground testing in the spring of 2027.
The company completed two registered direct offerings during the quarter that raised gross proceeds of roughly $45 million (USD) through the sale of roughly 19.2 million common shares in May, which materially boosted the company's total share count by about 48% during the quarter from 45.3 million shares in April to about 66.8 million shares in July 2026. Management indicated that this equity issuance provides the company with more than 24 months of liquidity.
In early July, the company announced it had selected BETA Technology's (NYSE: BETA) flight-control hardware and customized software for integration into the Cavorite X7. BETA is on track to certify its conventional take-off and landing vehicle in 2027 and is targeting 2028 for certification of its eVTOL. We are encouraged by the company's decision to fast-track the flight control development of the Cavorite X7 by partnering with BETA.
The eVTOL industry continued to underperform the broader market over the past 3 months as the average stock in the industry has fallen roughly 20% while the S&P 500 has risen by 7%. While individual companies continue to make steady progress toward certification and improve their commercialization efforts, concerns about financing terms and the market's preference for sectors experiencing explosive growth, such as memory chips and AI infrastructure, have diverted investor attention from the eVTOL sector.
We have not made any adjustments to our long-term forecasts for deliveries or margins, but the company has materially lowered its near-term financing risk, which is slightly offset by a higher share count today. Our 12-month target price for the shares remains $3.25, representing more than 100% upside from the current price. Given the stock's past volatility, negative sentiment in the industry, and Horizon's relative outperformance, we think the shares could continue to trade in a wide range over the coming months. We would encourage long-term investors to opportunistically build positions when prices are attractive relative to our target.
We encourage investors to review our full updated research report on New Horizon Aircraft which can be accessed at https://scr.zacks.com/home/.
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