Key Highlights

● Barclays moved Archer to Overweight with an $8 target.

● Shares traded near $4.99 versus Thursday's $4.72 close.

● Barclays downgraded Joby to Underweight.

● Archer is developing Midnight, a piloted electric aircraft.

Archer Aviation (NYSE:ACHR) climbed on Friday after Barclays (NYSE:BCS) moved the stock to Overweight and raised its price target to $8 from $4.50. The shares opened at $5.02 and were trading near $4.99 in late morning, up from Thursday's close of $4.72.

Accounts of the rating change differed slightly. One source described it as an upgrade from Equal Weight, while another said Barclays had assumed coverage at Overweight. Either way, the new target sits well above the current share price, signalling that the firm sees substantial upside in its view.

A split verdict on air taxis

The Archer call was part of a broader set of moves by Barclays on electric vertical take-off and landing aircraft, or eVTOLs, the battery-powered air taxis that several companies hope to launch in cities. The firm took a very different view of Archer's main US rival. Barclays analyst Anthony Valentini downgraded Joby Aviation (NYSE:JOBY) to Underweight with a $4 target, down from $6, and Joby shares fell.

Joby was also dealing with a legal setback. A federal Jury in Tampa awarded Aerosonic about $116.9 million, finding that Joby Aero breached a confidentiality agreement and misused trade secrets. A Joby spokesperson said the company intends to "vigorously pursue all available post-trial and appellate remedies." Verdicts can be appealed.

Elsewhere in the group, EHang Holdings (NASDAQ:EH) rose, and Barclays upgraded Vertical Aerospace to Equal Weight from Underweight.

What Archer is building

Archer is developing Midnight, a piloted electric aircraft designed to carry passengers on short urban trips, such as from a city centre to an airport, as an alternative to congested road travel. The company has partnerships with major airlines and has been working through the certification process with the Federal Aviation Administration, a lengthy and demanding step for any new type of aircraft.

Because eVTOL companies have little or no Revenue yet, their shares are highly sensitive to analyst views, regulatory progress and funding news. Low-priced stocks like Archer can also swing sharply in both directions.

A busy day for aerospace research

Barclays' eVTOL calls came as the firm launched broader coverage of defence and aerospace. It initiated Palantir (NASDAQ:PLTR) at Overweight with a $265 target, SpaceX (NASDAQ:SPCX) at Overweight with a $254 target, Rocket Lab at Overweight with an $85 target and Lockheed Martin at Equal Weight with a $554 target.

Market backdrop

Stocks rose on Friday. The S&P 500 gained 46.18 points to 7,811.54, finishing just below its record close, and the Dow added 423.31 points to 51,654.95. On the NYSE, gainers outnumbered losers by about 1.65 to 1, though Volume was light.

Higher interest rates remain a challenge for development-stage companies that need capital. The 10-year Treasury Yield is near a 24-year high, and the Federal Reserve raised rates in September for the first time since 2023. Fed Governor Christopher Waller said Thursday he anticipates additional hikes to bring Inflation back to the Fed's goal.

FAA Certification Progress Is Archer's Next Milestone

Investors will look for progress in Archer's FAA certification and any updates on commercial launch plans, as well as reactions from other analysts to Barclays' sector reshuffle. Joby's post-trial process is also worth following for the wider eVTOL group. Macro catalysts include September consumer price data on Wednesday, October 14, bank Earnings from October 13 to 16 and the Fed meeting on October 27 to 28. Stocks trade on Monday, October 12, while the Bond Market is closed for Columbus Day.