90% Gain Possible? Analysts Are Bullish on Joby Aviation

Key Points

• Joby shares have been consolidating since ending a 60% selloff earlier this year.
• However, analysts are extremely bullish, with some calling for up to 90% upside.
• The technical setup supports this, and investors should be getting excited. 

As we turn the corner into the final few weeks of the year, there are not going to be many stocks offering the kind of upside that Joby Aviation Inc NYSE: JOBY is. What’s interesting is that its outlook hasn’t been this bullish in a while. The California-based electric air taxi company, which boasts a market cap of $4 billion, went through a 60% sell-off earlier this year, and the stock has been trading mostly flat since April.

However, investors have been eagerly waiting for signs of recovery, and there are several reasons to think now might be the perfect time to consider getting involved. 

Joby's Forward Momentum

While Joby’s earnings report in August raised some concerns about its path to profitability, analysts have remained bullish that the company is on the verge of reaching a critical inflection point. Joby has a strong lineup of milestones ahead, which should help the bull’s case. Initial aircraft deliveries and certification processes are both underway, while the company is also gearing up to launch commercial operations across markets in the U.S. and Middle East and even a deployment with the Department of Defense. 

Joby’s vertically integrated manufacturing strategy has also impressed, as it allows the company to maintain tighter control over production, which should translate into superior product quality and operational efficiency.

Bullish Analyst Updates Highlight Joby’s Growth Potential

These have been the main reasons the stock has received so many bullish updates from analysts in recent weeks. In a note to clients earlier this month, the team over at Canaccord Genuity reiterated their Buy rating on Joby shares, along with a price target of $10.50, nearly 90% above where Joby shares were trading after Thursday’s open. 

This bullish outlook echoed that of HC Wainwright, who also reiterated its Buy rating earlier this month, and Cantor Fitzgerald, who did the same at the end of September. There’s a general feeling of optimism about the company’s progress, particularly its ability to reach near-term production targets of one aircraft per month by the end of 2024. Considering Joby’s shares are still picking themselves up after an eye-watering selloff earlier this year, you can’t help but feel there’s a bargain to be had right now.  

Potential Concerns: Joby’s Upcoming Earnings Report Is Critical

Investors thinking about getting involved should know that there’s a good bit riding on the company’s upcoming earnings report at the end of the month. Investors will be watching closely to see whether Joby can meet its ambitious production goals while managing high capital expenditures and research and development costs to ensure it has enough runaway. Additionally, pursuing a vertical integration strategy, while beneficial for manufacturing control, may lengthen certification timelines with the FAA, something that’s been noted by analysts.

Still, with long-time investor Toyota recently making a fresh $500 million investment in Joby, the company should have more than enough financial backing to achieve its near-term goals.

Getting Involved: Joby’s RSI Signals Plenty of Upside Potential

Beyond the positive analyst updates and optimistic outlook, there’s also the stock’s technical setup to consider, which, in the case of Joby’s relative strength index (RSI), is also bullish. For context, the RSI measures a stock's recent momentum on a scale of 0 to 100, with readings above 70 indicating extremely overbought conditions and below 30 signaling the opposite. Joby’s RSI of 55 shows that the stock is very much in neutral territory, meaning there’s a ton of room for it to run to the upside before it could be considered to be running a little hot. 

This isn’t the kind of stock to be going all-in on; it’s far too small and speculative right now. However, the potential upside should justify Joby’s inclusion on the watchlist at the very least. Despite some ongoing concerns over capital expenditures and regulatory hurdles, there are a lot more reasons to get involved versus staying away. 

Let’s see if the stock can continue to tick upwards into their earnings later this month. Assuming no nasty surprises with that update, the upside could get interesting pretty quickly.