Why EHang Stock Is Gaining Altitude Today

Shares of companies developing electric vertical take-off and landing (eVOTL) aircraft have been hit hard by the recent market sell-off. But at least one investment bank thinks shares of EHang Holdings (NASDAQ: EH) have been hit too hard.

EHang stock climbed as much as 13% on Monday and was up 8% as of 1:30 E.T. after the stock was upgraded to a buy at Deutsche Bank.

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A national champion at a discounted price?

EHang is a Chinese company that is one of a number of start-ups racing to commercialize eVTOL technology, a hybrid design that blends the flight capabilities of a helicopter with the stability of a small plane. The battery-powered aircraft are envisioned as a more efficient way to bypass city traffic jams and to feed passengers onto larger aircraft.

Speculative stocks have been hit hard by the current sell-off, leaving EHang down 40% from where it was in February. Deutsche Bank analyst Edison Yu thinks that is an overreaction and upgraded the shares to buy, from hold.

The analyst sees the sell-off as an attractive entry point, arguing that China is in the early stages of cultivating eVOTL technology. Yu's price target is $20, down from $22, but that price is nearly 30% higher than where the stock currently trades.

Is EHang a buy?

All eVOTL stocks are speculative at this point, with the industry still in the early stages of development. But EHang appears to be among a small number of companies that are out in front of the pack, and as the Deutsche Bank analyst notes, China's regulatory environment appears welcoming to this new tech.

For investors with the patience to ride out near-term turbulence, EHang could be an attractive candidate as part of a well-diversified portfolio.

Should you invest $1,000 in EHang right now?

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.