In the final weeks of 2024, so-called electric vertical takeoff and landing (eVTOL) companies such as Archer Aviation Inc. New York Stock Exchange: ACHR dominated the headlines. Archer and some of its competitors are looking to bring an affordable and convenient line of air mobility products to market. Whichever company (or companies) can successfully meet regulatory requirements and launch eVTOL aircraft at significant scale will likely take advantage of the expected new market associated with air taxis.
While these eVTOL companies have caught investors’ attention, there are a number of other aerospace and defense companies to watch in 2025. These firms may have less glamorous projects in the pipeline or – in the case of rival eVTOL companies – have not seen share prices rise in recent months. The fact that these companies are under scrutiny could make them even more attractive to investors who want to avoid jumping on the investment bandwagon.
The aerospace and defense industry is expected to grow significantly in the coming quarters, thanks in large part to ongoing geopolitical tensions that have led to global defense spending of about $2.4 trillion in 2023. Growing interest in commercial air travel following a COVID-related drop in business and as inflation has stabilized is another factor that could help companies in the industry grow.
Ducommun: brilliant results in the third quarter and signs of undervaluation
Ducommun today
(As of 5:11 p.m. ET)
- 52 week range
- $47.53
▼
US$70.50
- P/E ratio
- 30.78
- Target price
- $73.00
Ducommun Inc. New York Stock Exchange: DCO creates electronic and structural systems used in a variety of aerospace and defense applications, as well as other industries. Revenue topped $200 million for the first time in the latest quarter, driven by Ducommun’s military and space businesses. The company beat analysts’ expectations for EPS and EBITDA for the quarter.
Ducommun’s recent growth has been fueled by a number of major contracts with defense firms such as RTX Corp. New York Stock Exchange: RTXformerly Raytheon. In 2024, Ducommun awarded RTX several contracts totaling approximately $50 million.
Despite this strong performance, Ducommun shares are up just under 22% in the year to December 13, 2024, meaning the company is slightly behind the S&P 500 in terms of growth. Ducommun has a P/S ratio of 1.2 and a forward P/E ratio of 19.4, which is competitive for the industry and suggests the company has room to grow further and perhaps eventually outperform the broader market.
Eve Holding: eVTOL is quietly working on testing
EVA today
(As of 5:44 p.m. ET)
- 52 week range
- $2.33
▼
$7.57
- Target price
- $6.00
A lesser known eVTOL company, Eve Holding Inc. New York Stock Exchange: EVEXis just over a third the size of Archer Aviation by market capitalization as of December 13, 2024. While Eve doesn’t have the backing of a major auto company like its rival Archer, it has nonetheless received funding from Brazil’s National Development Bank. and a large loan from Citibank to support research and development. These additions brought the company’s total cash, cash equivalents and financial investments to approximately $280 million at the end of the third quarter, helping improve its liquidity.
Perhaps more importantly, Eve is getting closer to bringing the car to market. The company completed development of an engineering prototype in July, and Eva has since put the prototype through an extensive series of tests in hopes of further progress toward regulatory approval.
Eve is currently a Buy, according to reviews from three Wall Street analysts. As of Dec. 13, the upside is about 27%, but notably, much of this could be due to the company’s share price decline, which has seen the stock fall about 32% in the past year. Investors bullish on Eve’s prospects amid regulatory changes in 2025 may find the company presents an attractive value proposition and buying opportunity before then.
EHang: ambitious production plans of a major player in China
Hang today
(As of 5:45 p.m. ET)
- 52 week range
- $9.51
▼
$22.98
- Target price
- $24.75
Chinese unmanned aerial vehicle (UAV) company EHang Holdings Ltd. NASDAQ: EH provides logistics, products and services related to eVTOL. It is a major competitor in China, where it has received the first type certificate, production certificate and standard airworthiness certificate for eVTOL passenger unmanned aircraft issued by the government.
For EHang, the last quarter has been a busy period in overcoming the mechanical and regulatory hurdles needed to bring the vehicle to market. For example, in early 2024, the company made significant progress in developing a solid-state battery that increased flight endurance by more than 90%.
EHang’s order backlog continues to grow, with companies primarily based in China taking advantage of its specialized systems and tools. As of the end of the quarter, the company said it had approximately 1,000 EH216-S products in its portfolio – the EH216-S is a two-person eVTOL multicopter.
Despite being down 14% in the year to December 6, EHang shares remain a unanimous buy, according to three Wall Street analysts. Like EVEX, EH’s share price has fallen over the past year, although by a more modest percentage than EVEX. This is one of the reasons why EH stock has an upside potential of over 61%. However, everything will depend on the company’s ability to achieve the goals of its production model.
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