LILM - Lilium stock cut to Sell at Barclays on valuation cash concerns

Lilium NV ( NASDAQ: LILM ) was downgraded by Barclays as the future for eVTOL player remains uncertain on multiple fronts.

Namely, the bank’s analysts pointed to reduced cash balances and a longer than expected time to certification as headline concerns.

“We expect the business to ultimately perform well, but due to sizable unfunded spending needs through certification, equity holders should be conscious of additional issuance and corresponding reduction in ownership stake,” the team warned. “Lilium’s extended timeline to certification, likely driven in part by a more complex design, will require incremental costs from those presented during the SPAC process.”

As such, the elongated path to certification is likely to prompt further capital raises and thus dilution. All of these factors taken together caused the bank’s analysts to cut their rating on shares to Underweight from Equal Weight and trimmed their price target to just $1 from $2.

“Despite the current robust earnings growth profile, LILM shares do appear modestly overvalued relative to a group of peer businesses given the likelihood of dilution of equity holders,” the team concluded. “Our analysis points to the need for increased certainty around certification and capital needs to become overly optimistic on LILM shares from current valuation levels.”

Shares fell 2.22% in premarket trading on Wednesday.

Read more on the company’s UK expansion aims .

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