Joby Aviation (JOBY) is back in focus after filing a US$750 million at-the-market follow-on equity offering, a key funding move as it advances FAA certification and prepares for commercial air taxi operations.

The follow on offering lands after a tough stretch for Joby Aviation shareholders, with the share price down about 47% year to date and the 1 year total shareholder return declining a similar amount, even though the 3 year total shareholder return is still positive.

If the air taxi story has caught your attention, it can be useful to see what else is developing across next generation transport and automation, including the opportunity set in 37 robotics and automation stocks

Joby Aviation now trades well below the average analyst price target after a sharp share price pullback and a sizeable US$750 million issuance overhang. Where does a reasonable fair value range really line up against today’s price?

Most Popular Narrative: 29% Undervalued

Against the last close at $7.58, the most widely followed narrative on Joby Aviation points to a fair value of about $10.68, which implies a sizeable gap that rests on ambitious growth and margin assumptions.

The analysts have a consensus price target of $10.68 for Joby Aviation based on their expectations of its future earnings growth, profit margins and other risk factors.

However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $18.0, and the most bearish reporting a price target of just $6.0.

Want to see what has to happen for Joby Aviation to reach that fair value range? The narrative leans on rapid revenue expansion, a sharp margin shift and a premium earnings multiple. Curious how those moving parts fit together across the next few years.

Result: Fair Value of $10.68 (UNDERVALUED)

However, Joby Aviation could still surprise the consensus if its FAA certification progress unlocks earlier commercial routes and its defense and autonomy programs scale faster than expected.

Another View on Joby Aviation’s Valuation

The earlier fair value of $10.68 for Joby Aviation is driven by long range earnings and P/E assumptions. A simpler lens is the current P/B ratio of about 4.2x, which is more than double the 1.8x average for global airline peers. That gap suggests the market is already pricing in a lot of success. How comfortable are you with paying that kind of premium today?

Next Steps

With mixed signals around Joby Aviation's valuation and outlook, it makes sense to move quickly and review the numbers yourself, alongside our breakdown of 1 key reward and 2 important warning signs.

Looking for more investment ideas beyond Joby Aviation?

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• Spot potential mispricing early and review companies that look attractively valued using the 50 high quality undervalued stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.