Raymond James has downgraded Vertical Aerospace to Underperform from Market Perform, pointing to concerns over the company's capacity to raise capital while it advances through a pivotal phase of development.
While the brokerage expressed respect for Vertical's management team and recognized the progress made under the U.K. Civil Aviation Authority's more stringent certification standards, it warned that the company's liquidity runway appears constrained.
Excluding approximately $92 million remaining under Vertical's at-the-market offering program, Raymond James projects the firm's cash resources would carry it only through mid-June, assuming flight testing spending proceeds at normal levels. The broker said that, with more time and adequate funding, Vertical could still be successful, but it emphasized that investor appetite for higher-risk ventures has diminished, especially for companies with market capitalizations below $500 million.
Raymond James also drew attention to emerging competitive pressure for engineering talent after Archer Aviation announced plans to base its U.K. engineering hub in Bristol. The brokerage flagged this development as raising the risk of talent attrition at Vertical, specifically citing a planned move of Dr. Limhi Somerville to Archer in early 2026.
In early November, Vertical indicated it was working to secure an industrial partner and suggested that such a partnership could include an investment. Raymond James noted that a deal of that nature could help mitigate the company's funding shortfall and provide reassurance to investors.
At this stage, the brokerage said it does not anticipate a takeover of Vertical by a competitor. Raymond James continues to rate Archer Aviation as its sole Outperform-rated stock in the eVTOL group, pointing to Archer's relative valuation and a commercialization strategy it considers less capital intensive.
Context and implications
The downgrade reflects a combination of near-term liquidity concerns and longer-term industry dynamics: constrained cash reserves during an intensive testing phase, softer investor demand for higher-risk, smaller capitalization ventures, and intensified competition for specialized engineering personnel in the U.K. market following Archer's hub announcement.
Vertical's comment in early November that it is pursuing an industrial partner - potentially involving capital investment - is identified by Raymond James as a pathway to address funding constraints, though the broker stopped short of predicting a takeover by a rival.
Bottom line
Raymond James' downgrade centers on funding risk and talent competition, leaving Vertical's long-term prospects contingent on securing additional capital or a strategic industrial partner, while Archer remains the broker's preferred eVTOL equity based on valuation and capital-efficiency considerations.