Key Stats for AeroVironment Stock
- Pre-market Price Change for AVAV stock: -3.5%
- $AVAV Share Price as of Dec. 9 $281
- 52-Week High: $418
- $AVAV Stock Price Target: $401
Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free)>>>
What Happened?
AeroVironment (AVAV) stock took a hit after the company reported second-quarter results that showed strong revenue growth but weaker-than-expected profits.
The defense technology company earned $0.44 per share on an adjusted basis, falling short of the $0.79 that analysts expected. Revenue came in at $472.5 million, beating the $465.63 million consensus estimate.
The profit miss stems largely from costs tied to the company’s acquisition of BlueHalo, which closed in May. AeroVironment said intangible amortization and other deal-related expenses weighed on earnings during the quarter.
The company also faced operational challenges from the launch of a new Oracle ERP system and disruptions from a government shutdown, which delayed some foreign military sales shipments.
Despite these headwinds, the company secured record contract awards worth $3.5 billion during the quarter and achieved bookings of nearly $1.4 billion.
Just days before earnings, AeroVironment announced an $874 million contract from the U.S. Army to supply drones and counter-drone systems to international allies over five years.
See analysts’ growth forecasts and price targets for AVAV stock (It’s free!) >>>
What the Market Is Telling Us About AVAV Stock
AVAV stock had surged 80% year-to-date before this earnings report, reflecting strong investor enthusiasm for drone technology and defense systems. The selloff suggests the market is concerned about near-term profitability challenges, even as the company’s long-term growth story remains intact.
Management lowered its full-year earnings guidance to $3.40-$3.55 per share from $3.60-$3.70 previously, citing a higher tax rate from the BlueHalo deal. However, the company raised the low end of its revenue outlook to $1.95-$2 billion, signaling confidence in top-line growth.
The real question is whether integration costs and operational issues are temporary setbacks or signs of deeper problems.
Management expects gross margins to improve to the high 30s by the fourth quarter as production scales up and the product mix shifts toward higher-margin hardware sales.
AVAV also emphasized that 93% of its revenue guidance is already backed by firm orders or long-term contracts, reducing execution risk.
With $669 million in cash and a pipeline of major defense contracts, AeroVironment appears well-positioned for the long term.
The company is expanding manufacturing capacity, including a new 100,000-square-foot facility in Salt Lake City that could produce over $2 billion worth of Switchblade drones annually once operational next year.
Investors should watch whether AVAV stock can stabilize as the company works through its integration challenges and ramps up production to meet surging demand for autonomous defense systems.
Estimate a company’s fair value instantly (Free with TIKR) >>>
How Much Upside Does AVAV Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
