Investors may be overlooking risks in Joby Aviation , a company known for making electric aircrafts, Deutsche Bank warned. Analyst Edison Yu downgraded the stock to sell from hold. Yu also cut $2 off his price target to make it $4. His new target implies the stock could slide 11.1%. Yu noted that the weight of the aircraft has raised questions and led him to wonder if the design is "overly aggressive." He said the current design relies on parts that have high performance but are more difficult to get approved by regulators. "Operationally, despite Joby being perceived as the leader in the industry, the developmental path of its [electric vertical takeoff and landing] aircraft seems increasingly challenging to us as we think the aircraft is dealing with weight management issues," Yu said in a Tuesday note to clients. The stock lost 3.3% in premarket trading. It's up 34.3% this year after losing 36.9% and 54.1% in 2021 and 2022, respectively. Yu said Joby is currently building an iteration of its eVOTL that's "company conforming," meaning it will not get any testing credit with the Federal Aviation Administration when it has a pilot onboard. He also said there is not good visibility on the regulation and certification process for its aircraft with different parts of the project at different stages. Joby previously pushed out its certification process to late 2024 from 2023. The first commercial flights are slated for 2025 under the new timeline. But Yu did note the company is considered a leader in the space despite those caveats. He also said the company maintains a healthy cash position but also has the largest spending burden due to its relatively large headcount of about 1,400 people and high level of integration. — CNBC's Michael Bloom contributed to this report.
