Canaccord on Vertical Aerospace Ltd. (EVTL): 'several upcoming catalysts'
Canaccord analyst Austin Moeller reiterated a Buy rating and $9.50 price target on Vertical Aerospace Ltd. (NYSE: EVTL).
The analyst comments "Solidifying liquidity options through aircraft certification (generally in-line with FlightPath 2030 targets of ~$700M to certify along with hybrid R&D work) materially de-risks EVTL shares ahead of several upcoming catalysts. Management noted the combined $850M in available funding provided by Mudrick, Yorkville and the ATM can be drawn entirely at the company’s discretion. There are no restrictive terms within the transactions’ securities purchase agreements requiring Vertical to draw funds from the new financing vehicles. This importantly leaves the door open for other capital raising solutions in the near future, such as a strategic investor from the A&D or automotive sectors. The broader financing package provides Vertical with a capital backstop through the company’s intended 2028 aircraft CAA/EASA dual certification with added flexibility to raise capital from public market investors or an A&D prime when and if it makes sense. The convertible secured notes component from Mudrick supports $5M per month over the next year, while the convertible preferred stock aspect from Yorkville adds flexibility to draw $25M bi-monthly for the next two years. These two facilities support up to $170M in additional secured financing through the end of 2026, which is important considering management’s guided cash burn of ~$195M over the NTM. With piloted VX4 transition flight milestones approaching completion and the balance sheet now positioned for the long term, we view the recent selloff in EVTL shares as an attractive buying opportunity. In our view, investors should be more encouraged by the largest shareholder’s (Mudrick Capital) affirmation of its sustained long-term commitment to Vertical and completion of type certification for Valo, which will be the only eVTOL certified in Europe under the 10-9 safety rating. We have already contemplated equity dilution in our model. We are maintaining our BUY rating and $9.50 PT until more details on deal pricing and share issuance are solidified."
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Shares of Vertical Aerospace Ltd. closed at $2.06 yesterday.