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EHang Stock Declines After BofA Issues Double Downgrade to Underperform
Shares of EHang Holdings Ltd. (NASDAQ:EH) fell 2% on Wednesday after BofA Securities issued a double downgrade on the stock, moving its rating from Buy to Underperform. The firm also significantly reduced its price target for the company from $13.00 to $5.40.
The downgrade was prompted by an incident in late June where a lightsport pilot electric vertical take-off and landing (eVTOL) aircraft crashed into a high-rise building in Beijing. The aircraft involved was an Aurora SA60L, a single-engine, two-seat vehicle, and was not an EHang model.
In a note, BofA Securities analyst Fiona Liang stated that the incident would likely lead to stricter regulations governing low-altitude airspace. The analyst also suggested it could weaken consumer confidence in the viability and safety of eVTOL flights, a key factor for the emerging industry.
AdAs a result of these concerns, BofA has lowered its financial projections for EHang. The firm reduced its estimated sales volume for 2026, 2027, and 2028 by 11%, 16%, and 18%, respectively. This led to cuts in non-GAAP net profit estimates for the same years, though the gross profit margin forecast remains unchanged.
BofA Securities cited expectations of slower commercialization and increased regulatory uncertainty as the primary reasons for the Underperform rating. The revised price target reflects the lower sales projections and a reduced price-to-sales multiple.