AeroVironment, Inc. (NASDAQ:AVAV) stock rose 0.40% (As on October 10, 11:26:03 AM UTC-4, Source: Google Finance) after Raymond James analyst Brian Gesuale has downgraded AeroVironment Inc the company from Strong Buy to Outperform, with a lowered price target of $125.00. The analyst is cautious due to ongoing Congressional dysfunction and waning support for Ukraine funding, which he believes could have a negative impact on the company.
Gesuale points out that U.S. support for Ukraine has been moderating since the beginning of the war. If this trend continues and funding slows, it could have implications for stocks, including AeroVironment. Despite this concern, the analyst expects order and backlog growth to remain strong in the near term, but he sees a potential deceleration in the coming quarters.
Looking ahead, Gesuale believes that FY24 consensus estimates will increase. He anticipates a broader munition inventory restocking cycle, a strong product cycle, and expansion of the company’s global customer base to boost estimates for FY25 and FY26. The analyst also suggests that street expectations for FY24 remain too low and expects revisions to moderate from current levels.
Gesuale estimates that AeroVironment will achieve FY24 revenue of $705 million, which is 20% higher than the consensus estimate. He predicts an adjusted EPS of $3.25 for the same period. For FY25, the analyst projects revenue and adjusted EPS of $801 million and $3.78, respectively.
In its recent Q1 earnings report, AeroVironment reported revenues of $152.3 million, a 40% increase year-over-year and surpassing the consensus estimate of $137.24 million. Net income attributable to AeroVironment for the first quarter of fiscal 2024 was $21.9 million, or $0.84 per diluted share, as compared to net loss attributable to AeroVironment of $(8.4) million, or $(0.34) per diluted share, in the prior-year period, respectively. As of July 29, 2023, funded backlog was $539.7 million, as compared to $424.1 million as of April 30, 2023.
Further, the company took steps to further strengthen and expand their product portfolio through the previously announced acquisition of Tomahawk Robotics. This transaction, which is expected to close in the second quarter is expected to add common control solutions with advanced open standard communications technologies, namely the Kinesis Ecosystem – to the current AI enabled software suite. The company expects that this acquisition enhances AeroVironment’s existing control and communications solutions, opens up adjacent market opportunities, enables multi-domain integration across all unmanned platforms, and brings additional top notch software engineering talent to the growing team