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Ukraine Drone Supplier AeroVironment Goes Vertical On Upgrade, Q1 Beat
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HARRISON MILLER08:49 AM ET 09/06/2023
Drone and robotics maker AeroVironment (AVAV) flew past estimates for its Q1 results late Tuesday. AeroVironment stock soared early Wednesday after receiving an analyst upgrade and price target hike.
Arlington, Va.-based AeroVironment produces unmanned aircraft systems, including the Switchblade drones that have served in Ukraine since the beginning of Russia's invasion in February 2022. Switchblade drones launch from tubes and crash into their targets to detonate explosive warheads. They are also referred to as "suicide" drones. Other drones in AeroVironment's portfolio include the Puma hand-launched recon drones, which have also been utilized in the war overseas.
AeroVironment reported adjusted earnings of $1 per share, compared to a loss of 10 cents per share last year. Revenue leapt 40% to $152.3 million for the quarter. Analysts polled by FactSet expected earnings of 26 cents per share on $128.5 million in revenue.
The company backlog surged 27%, to a record $539.7 million, compared to $424.1 million the prior quarter. AeroVironment added $270 million in new bookings during the quarter, with strong growth across all of its business segments.
On Aug. 22, AeroVironment announced plans to acquire Tomahawk Robotics for $120 million in a cash and stock deal on. Tomahawk makes AI-enabled robotics control systems, which AeroVironment believes will improve its unmanned systems and drone performance as well as drive incremental revenue growth.
AeroVironment lifted its revenue guidance based on its order growth. The company guided full-year sales between $645 million to $675 million, compared to its prior range from $630 million to $660 million. AeroVironment maintained its adjusted earnings outlook of $2.30 to $2.60 per share. The outlook does not include the Tomahawk Robotics acquisition, which will be added in later reports once the deal closes.
FactSet analysts expect full-year earnings increase 109% to $2.64 per share on $666.1 million in sales.
AeroVironment Stock
Baird upgraded AeroVironment to outperform from neutral early Wednesday, citing its "strong start" to the fiscal 2024 year. The firm noted the "healthy" Q1 earnings and revenue beat. The surge in order activity pushed its backlog to record levels and provides 100% coverage for the company's annual revenue outlook, Baird wrote in a research note. Strong Switchblade demand should maintain AeroVironment's backlog at record levels throughout the fiscal year, setting the stage for several quarters of favorable growth. Baird hoisted its price target on AVAV stock from 95 to 128 — almost 35% above where shares ended on Tuesday.
AVAV stock soared 18.4% to 112.80 premarket Wednesday following the beat and upgrade. If the premarket moves hold it will push AeroVironment to a new 2023 high, surpassing its previous peak of 112.39 from late May.
Shares appear poised to reclaim their 50-day and 10-week lines after the open.
AVAV stock jumped more than 11% in 2023 through Tuesday's close.