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Electric Jet Maker Lilium Initiated Buy at Piper Sandler

'Lilium won’t generate revenue for a few years. ... But Lilium could fundamentally reshape the transportation industry,' Piper said.
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Lilium LILM shares rose sharply Thursday, after Piper Sandler initiated coverage of the German electric plane company with a buy rating and a $17 price target.

Lilium recently traded at $9.95, up 7%. It began trading Wednesday on the Nasdaq after a SPAC merger with Quell Acquisition.

“This type of investment isn’t for everyone,” Piper analyst Alexander Potter wrote in a commentary cited by CNBC.

“Lilium won’t generate revenue for another few years, and more capital will almost certainly be required. Volatility seems likely. But for investors who like to dream big, we think Lilium could fundamentally reshape the transportation industry, and now is the time to do the work.”

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The company’s focus on small, jet-powered planes may give it solid footing in the regional transportation market Potter said. That space offers better profit potential than an Uber-like service for short trips, he said.

“Lilium’s technology is well-suited to regional trips of about 100 miles (an attractive segment with unpalatable alternatives),” he said. “Lilium’s goal is to save hours of travel time for consumers, rather than just minutes.”

In other airlines news, last week, major U.S. carriers offered downbeat earnings guidance as the spread of the COVID delta variant curbs travel plans.

Atlanta-based Delta  (DAL) - Get Delta Air Lines, Inc. Report said in a Securities and Exchange Commission filing that for the third quarter, “adjusted total revenue, excluding third-party refinery sales, is expected to be at the lower end of the prior guidance range, as the recent rise in Covid cases is suppressing demand in the second half of the quarter.”