On Monday, EF Hutton initiated coverage on Horizon Aircraft (NASDAQ:HOVR) shares, a company specializing in aviation technology, with a Buy rating and a price target of $2.00. The firm highlighted the potential for Horizon Aircraft to avoid significant shareholder dilution in the near term due to its current financial position and prospective revenue streams.
Horizon Aircraft is reported to have approximately $5-9 million in cash reserves, which are expected to sustain the company's operations for the next 12 to 18 months. EF Hutton pointed out that Horizon Aircraft could limit future shareholder dilution through incoming patent licensing requests that may lead to revenues or partnerships, along with committed capital that could help the company achieve cash flow breakeven without the need to sell additional equity.
In addition to its financial strategy, Horizon Aircraft has also shown positive results in sub-scale testing, suggesting the company's technology could be developed into a drone-like tool for military applications, potentially providing revenue before the company secures full-scale certifications.
The investment firm's price target of $2.00 for Horizon Aircraft is based on a valuation that includes an average of a 1.1x 2028 Price/Sales ratio, which aligns with industry multiples, and a 10-year Discounted Cash Flow (DCF) model. This valuation takes into account the possibility of capital raises and future incremental dilution to existing shareholders.
EF Hutton's coverage initiation and price target announcement reflect an optimistic outlook for Horizon Aircraft's financial health and market potential, particularly in terms of limiting shareholder dilution and generating revenue through its innovative aviation technology.
In other recent news, New Horizon Aircraft Ltd. has made significant amendments to its warrant terms and is facing potential delisting from the Nasdaq due to non-compliance with the net income, market value of listed securities, equity, and minimum bid price standards.
The company has until October 14, 2024, to submit a Compliance Plan. Amid these developments, New Horizon Aircraft has appointed Tom Brassington, a veteran from eVTOL developer Lilium, as its new Chief Technology Officer.
The company has also set terms for a public offering expected to yield approximately $2.9 million. The offering includes 2.8 million Class A ordinary shares, warrants, and pre-funded warrants to purchase additional shares, with EF Hutton LLC serving as the sole book-running manager.
Furthermore, New Horizon Aircraft has reported significant progress in its eVTOL prototype testing. The Cavorite X7 eVTOL design is on track for completion and testing by 2026. These recent developments provide insight into the ongoing activities at New Horizon Aircraft Ltd.
InvestingPro Insights
Recent data from InvestingPro provides additional context to EF Hutton's optimistic outlook on Horizon Aircraft (NASDAQ:HOVR). The company's market capitalization stands at $5.74 million, significantly below EF Hutton's $2.00 price target. This discrepancy suggests potential upside if the company can execute on its strategies.
However, investors should note some challenging metrics. Horizon Aircraft's operating income for the last twelve months as of Q4 2024 was -$3.39 million, indicating the company is not yet profitable. This aligns with an InvestingPro Tip that the company is "not profitable over the last twelve months."
Another InvestingPro Tip highlights that Horizon Aircraft "holds more cash than debt on its balance sheet," which supports EF Hutton's assessment of the company's financial position. This could indeed help Horizon avoid significant shareholder dilution in the near term, as mentioned in the article.
It's worth noting that InvestingPro offers 16 additional tips for Horizon Aircraft, providing a more comprehensive analysis for investors interested in this aviation technology company.
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