READ THE FULL HOVR RESEARCH REPORT
New Horizon Aircraft (NASDAQ:HOVR) recently provided several updates on the development path of the company’s Cavorite X7 eVTOL, which has increased our confidence in the company’s ability to deliver an aircraft to the market.
When announcing the full-year results, the company’s CFO stated that “with $17 million in cash, Horizon has the resources to complete our full-scale demonstrator aircraft within the next 18 months.” (Note: the $17 million cited is in Canadian dollars, roughly $12 mil USD). At this time, we continue to forecast that the demonstrator vehicle will be completed in fiscal 2027.
In addition to the significantly improved liquidity position of the company, other notable items in the recently filed 10-K include:
- Staffing additions – the company roughly doubled its total number of employees from 16 to 30 during the year, which included several key hires in engineering roles. We would also note that the company has 17 positions listed on its website that it is looking to fill, with 15 of those positions classified as engineering roles. If the company were to fill all of these positions, it would boost headcount by more than 50% and likely accelerate the development of the full-scale demonstrator.
- Patents – As of the end of fiscal 2024, the company listed a total of 22 patents in its portfolio; however, this number has grown to 31 as of May 2025. We believe this is largely a result of the significant increase in engineering talent added to the roster during fiscal 2025. We expect the company’s IP portfolio to continue expanding, with a particular focus on propulsion and aircraft control systems.
- Development timeline – While the company had previously stated in its 2024 10-K that it expected to deliver the Cavorite X7 to the market in 2027, it was clear in presentations throughout the last year that the timeline was shifting. In the 2025 10-K, the company noted that “we do not expect to deliver any aircraft prior to 2030.” Our original model did forecast the delivery of a handful of aircraft in 2029, but we have always expected that 2030 and beyond will be the critical years for Horizon. We do not believe this is a significant shift in the development timeline at this time. However, we caution that the current timeline means it will be nearly five years until the company delivers an aircraft to the market, and that there may be several significant shifts in the market during that time.
- Capital structure – As anticipated, the company has been actively accessing the capital markets to fund operations and the development of the full-scale demonstrator. The company’s share count has more than doubled in the past year (last reported at 39.2 million shares) as a result of various financings and capital raised under an at-the-market stock sale agreement. Given that the company has indicated that it has adequate liquidity to fund the development of the full-scale demonstrator aircraft at this point, we anticipate the rate of share issuance to slow in 2026 before accelerating again after the demonstrator completes its initial test flights.
VALUATION
In our August update, we noted that if the company continued to deliver and make progress toward building its full-scale demonstrator aircraft, while also improving its liquidity/financial condition, we would reevaluate our 12-month target. The addition of key technical staff and the company’s ability to secure sufficient funding to complete the full-scale demonstrator of its aircraft have removed two significant uncertainties that previously impacted our valuation.
We will likely need to adjust our model several times over the coming years before Horizon Aircraft delivers its first aircraft. However, the elimination of near-term liquidity concerns is a significant positive development for the company, and we have lowered our discount rate in our DCF model to 17% as a result. If competitors make meaningful progress toward bringing a hybrid electric VTOL to the market before 2030, we may need to adjust this discount rate higher to reflect the added risk of market acceptance. However, for the moment, we believe this is an appropriate discount rate. Our DCF target valuation is now $2.00 within the next 12 months. However, as we have seen in the past three months, the company’s shares are frequently influenced by movements in the shares of industry leaders. Therefore, investors will need to be aware of any meaningful announcements from these companies as well.
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