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AeroVironment (AVAV)
NASDAQ:AVAV

AeroVironment (AVAV) AI Stock Analysis

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AeroVironment

(NASDAQ:AVAV)

Rating:68Neutral
Price Target:
$203.00
▲(8.79%Upside)
AeroVironment's overall score is buoyed by strong financial stability and strategic acquisitions like BlueHalo, which enhance its market position. However, high valuation concerns and profitability challenges temper the score, with technical indicators suggesting potential short-term risks.
Positive Factors
Acquisition
The BlueHalo sellers’ willingness to do an all-stock transaction is a major vote of confidence for the long-term business prospects.
Revenue Growth
AeroVironment is targeting nearly $1 billion in revenue in the fiscal year 2026, indicating strong growth ambitions.
Strategic Alignment
AeroVironment's unique position as a comprehensive defense tech systems provider and its strategic alignment to high-growth areas of U.S. and global defense spending.
Negative Factors
EBITDA Margins
The acquisition will not be accretive to adjusted EBITDA margins due to BlueHalo's exposure to services revenues, which are generally margin-dilutive.
Market Concerns
The Italian order was finalized during the Trump administration, which is significant amid investor concerns that Europe is looking to decrease reliance on American defense contractors.
Revenue Dependency
International customers represent approximately 40% of AeroVironment’s revenue, though this will decrease when the BlueHalo merger closes.

AeroVironment (AVAV) vs. SPDR S&P 500 ETF (SPY)

AeroVironment Business Overview & Revenue Model

Company DescriptionAeroVironment, Inc. designs, develops, produces, delivers, and supports a portfolio of robotic systems and related services for government agencies and businesses in the United States and internationally. It operates through four segments: Unmanned Aircraft Systems (UAS), Tactical Missile System (TMS), Medium Unmanned Aircraft Systems (MUAS), and High Altitude Pseudo-Satellite Systems (HAPS). The company supplies UAS, TMS, unmanned ground vehicle, and related services primarily to organizations within the U.S. Department of Defense and to international allied governments. It also designs, engineers, tools, and manufactures unmanned aerial and aircraft systems, including airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related to unmanned aircraft systems. In addition, the company offers small UAS products, including spare equipment, alternative payload modules, batteries, chargers, repair services, and customer support, as well as multiple aircraft, hand-held ground control system, and spare parts and accessories. Further, it develops high-altitude pseudo-satellite UAS systems. The company was incorporated in 1971 and is headquartered in Arlington, Virginia.
How the Company Makes MoneyAeroVironment generates revenue through the sale of its unmanned aircraft systems and tactical missile systems primarily to government and defense organizations. A significant portion of its income comes from contracts with the U.S. Department of Defense, as well as international military customers. The company also earns from providing support services, including training and maintenance for its products. Additionally, it engages in research and development contracts to create advanced solutions, which further contribute to its earnings. Key partnerships and collaborations with defense agencies and commercial entities enhance AeroVironment's market reach and revenue potential.

AeroVironment Earnings Call Summary

Earnings Call Date:Mar 04, 2025
(Q3-2025)
|
% Change Since: 31.49%|
Next Earnings Date:Jul 01, 2025
Earnings Call Sentiment Neutral
AeroVironment reported a mixed quarter with record backlog and significant contract wins, but faced operational challenges and revenue shortfalls due to external factors like LA windstorms and stop work orders. Despite these setbacks, the company remains confident in its long-term growth prospects and is making strategic investments to support future expansion.
Q3-2025 Updates
Positive Updates
Record Backlog and Large Contract Wins
AeroVironment reported a record backlog of $764 million, driven by large contract wins with the US Army's LASSO, US DOD's replicator, and the Danish Ministry of Defense.
Significant Growth in Loitering Munitions Segment (LMS)
The LMS segment recorded a 46% increase in revenue year-over-year, reaching $83.9 million, with more than 70% of this revenue coming from Switchblade 600.
BlueHalo Acquisition Progress
Significant progress on the BlueHalo acquisition, with key regulatory approvals secured and a shareholder vote scheduled for April 1, 2025. This acquisition is expected to enhance AeroVironment's technology and capabilities, especially in space technologies, counter-UAS, and electronic warfare.
Expansion of Manufacturing Capacity
AeroVironment is aggressively expanding manufacturing capacity with a new Switchblade production facility in Utah, set to double production throughput and support over $1 billion in annual LMS revenue by the end of fiscal year 2027.
Strong Future Outlook
Despite near-term challenges, AeroVironment expects more than 10% revenue growth and aims for $1 billion in orders for fiscal year 2025, with accelerating growth projected for fiscal year 2026.
Negative Updates
Revenue and Profitability Below Expectations
Revenue for the third quarter was $167.6 million, a decrease of 10% compared to the previous year, primarily due to production disruptions caused by unprecedented LA windstorms.
Lowered Fiscal Year 2025 Guidance
Guidance for fiscal year 2025 has been lowered, with expected revenues of $780 million to $795 million, adjusted EBITDA of $135 million to $142 million, and non-GAAP EPS of $2.92 to $3.13 per share.
Stop Work Orders and Tariffs Impact
Recent stop work orders tied to four foreign military sales contracts, representing about $13 million in orders, will impact Q4 deliveries. Additionally, the US government paused military aid to Ukraine and implemented new tariffs, affecting AeroVironment's operations.
Challenges in Uncrewed Systems Segment (UXS)
The UXS segment saw a 44% decline in revenue, primarily due to a decrease in Ukraine-related revenue. This segment is in a transition year, shifting away from Ukraine-related revenue to other growth opportunities.
Company Guidance
During AeroVironment's fiscal year 2025 third-quarter earnings call, the company provided updated guidance reflecting several operational challenges and strategic developments. Revenue for the quarter was $167.6 million, a decrease from $186.6 million in the same period last year, primarily due to disruptions from unprecedented Los Angeles windstorms and fires. The loitering munitions segment, however, saw a 46% revenue increase to $83.9 million, driven by strong demand for the Switchblade 600. Despite these gains, overall adjusted EBITDA fell to $21.8 million from $28.8 million the previous year. The company lowered its full-year revenue guidance to a range of $780 million to $795 million, with adjusted EBITDA forecasts now set between $135 million and $142 million. AeroVironment remains optimistic about future growth, citing a record backlog of $764 million and ongoing strategic investments, including the anticipated integration of BlueHalo, which is expected to enhance capabilities and market opportunities across multiple defense technology domains.

AeroVironment Financial Statement Overview

Summary
AeroVironment shows strong revenue growth and a robust balance sheet with low leverage, but faces challenges with profitability margins and cash flow generation. These areas need improvement to enhance financial health and maximize shareholder value.
Income Statement
75
Positive
AeroVironment has demonstrated solid revenue growth with a TTM (Trailing-Twelve-Months) revenue of $714.67M compared to $445.73M in 2022. The gross profit margin improved over time, indicating efficient cost management, but the net profit margin shows volatility, with recent margins at 4.62% in TTM. The EBIT and EBITDA margins have seen fluctuations, with TTM margins at about 4.63% and 7.03%, respectively. Overall, the company exhibits growth potential with some profitability challenges.
Balance Sheet
80
Positive
AeroVironment boasts a strong balance sheet with a high equity ratio of approximately 82.1% in TTM, reflecting financial stability. The debt-to-equity ratio is low at 0.04, indicating low leverage risk. However, the return on equity (ROE) is modest at 3.83%, suggesting room for improving shareholder returns. The company's solid equity position strengthens its financial footing.
Cash Flow
65
Positive
The cash flow statement reveals challenges in generating free cash flow, with a negative free cash flow of $-21.81M in TTM. While operating cash flow was negative at $-12.73M, the ratio of operating cash flow to net income suggests inefficiencies in cash generation. The company needs to improve its cash generation capabilities to enhance financial flexibility.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
742.56M716.72M540.54M445.73M394.91M367.30M
Gross Profit
290.75M283.93M173.51M141.24M164.56M153.10M
EBIT
33.08M71.82M-22.99M-20.20M43.31M47.13M
EBITDA
60.50M102.50M-79.08M43.35M54.24M57.02M
Net Income Common Stockholders
33.00M59.67M-173.71M-8.77M33.83M41.07M
Balance SheetCash, Cash Equivalents and Short-Term Investments
47.00M73.30M132.86M101.95M180.71M302.65M
Total Assets
1.05B1.02B824.58M914.20M928.57M584.95M
Total Debt
59.19M59.68M162.82M216.57M222.77M10.21M
Net Debt
12.19M-13.62M29.96M139.34M74.03M-244.93M
Total Liabilities
187.09M193.12M273.61M305.99M316.46M75.05M
Stockholders Equity
861.05M822.75M550.97M607.97M612.09M509.90M
Cash FlowFree Cash Flow
-25.65M-9.19M-3.47M-31.91M75.27M13.88M
Operating Cash Flow
-12.73M15.29M11.40M-9.62M86.53M25.10M
Investing Cash Flow
-26.88M-51.71M-7.00M-52.29M-378.77M59.17M
Financing Cash Flow
-20.62M-22.85M50.83M-16.61M194.16M-1.83M

AeroVironment Technical Analysis

Technical Analysis Sentiment
Positive
Last Price186.59
Price Trends
50DMA
152.48
Positive
100DMA
153.76
Positive
200DMA
172.59
Positive
Market Momentum
MACD
8.39
Negative
RSI
69.86
Neutral
STOCH
86.18
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AVAV, the sentiment is Positive. The current price of 186.59 is above the 20-day moving average (MA) of 171.83, above the 50-day MA of 152.48, and above the 200-day MA of 172.59, indicating a bullish trend. The MACD of 8.39 indicates Negative momentum. The RSI at 69.86 is Neutral, neither overbought nor oversold. The STOCH value of 86.18 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AVAV.

AeroVironment Risk Analysis

AeroVironment disclosed 80 risk factors in its most recent earnings report. AeroVironment reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
The market price of the Company Common Stock after the Transactions may be affected by factors different from those currently affecting the shares of Company Common Stock. Q4, 2024
2.
Following the Closing, funds affiliated with Arlington Capital Partners are expected to beneficially own approximately 26.2% of our common stock, which will allow them the ability to exert significant influence over us, and their interests may conflict with ours or yours in the future. Q4, 2024
3.
Some of our and BlueHalo's directors and executive officers have interests in the Transactions that are different from our stockholders generally and that may influence them to support or approve the Transactions. Q4, 2024

AeroVironment Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$6.00B317.501.45%7.32%
68
Neutral
$8.50B156.953.94%5.21%
66
Neutral
$4.49B12.285.32%248.53%4.08%-12.00%
65
Neutral
$5.78B
58
Neutral
$3.04B-4.45%5.66%52.71%
49
Neutral
$5.34B-73.89%17.43%
SPSPR
37
Underperform
$4.48B81.63%-2.91%-109.95%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AVAV
AeroVironment
186.59
-17.27
-8.47%
KTOS
Kratos Defense
40.36
19.56
94.04%
MRCY
Mercury Systems
52.01
21.84
72.39%
SPR
Spirit AeroSystems
37.68
7.23
23.74%
ACHR
Archer Aviation
9.36
5.93
172.89%
KRMN
Karman Holdings Inc.
46.01
14.01
43.78%

AeroVironment Corporate Events

M&A TransactionsBusiness Operations and Strategy
AeroVironment Highlights BlueHalo Acquisition at Conference
Positive
Jun 3, 2025

On June 3, 2025, AeroVironment, Inc. presented an overview of its business at the William Blair Annual Growth Stock Conference in Chicago. The company highlighted its recent acquisition of BlueHalo, which closed on May 1, 2025, and is expected to enhance revenue and market position. The acquisition is anticipated to provide significant synergies and strengthen AeroVironment’s portfolio of mission-critical capabilities, positioning it as a diversified defense technology provider. The company also outlined its strategic focus on expanding into new markets and maintaining its role as a market innovator, despite the inherent risks and uncertainties involved.

The most recent analyst rating on (AVAV) stock is a Buy with a $200.00 price target. To see the full list of analyst forecasts on AeroVironment stock, see the AVAV Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
AeroVironment Completes Acquisition of BlueHalo
Positive
May 5, 2025

AeroVironment, Inc. announced that it will meet with investors from May 5-8, 2025, to discuss its recent acquisition of BlueHalo, which was completed on May 1, 2025. The acquisition is expected to drive significant growth and strengthen AeroVironment’s position in the defense technology sector. The company aims to leverage BlueHalo’s capabilities to enhance its product offerings and expand into new markets, despite potential risks and uncertainties associated with the integration process.

Executive/Board ChangesPrivate Placements and FinancingM&A TransactionsBusiness Operations and Strategy
AeroVironment Completes Acquisition of BlueHalo, LLC
Positive
May 1, 2025

On May 1, 2025, AeroVironment, Inc. completed its acquisition of BlueHalo, LLC, enhancing its position as a global defense technology leader. The merger, which involved a new $700 million loan and the issuance of 17,425,849 shares of AeroVironment’s common stock, aims to accelerate innovation and strengthen customer partnerships. The transaction also led to the appointment of new executives and board members, including Brad Truesdell as Chief Operating Officer, and expanded AeroVironment’s operational scale and capabilities across multiple domains.

M&A TransactionsShareholder Meetings
AeroVironment Advances with BlueHalo Acquisition Approval
Positive
Apr 1, 2025

On April 1, 2025, AeroVironment’s stockholders approved the issuance of common stock to facilitate the company’s acquisition of BlueHalo LLC, marking a significant step towards becoming a leading next-generation defense technology company. The transaction, expected to close in May 2025, aims to enhance AeroVironment’s capabilities in delivering integrated, all-domain solutions, thereby creating new growth and value opportunities.

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
AeroVironment Reports Record Backlog Amid Revenue Decline
Neutral
Mar 4, 2025

AeroVironment reported its fiscal 2025 third-quarter results, highlighting a record funded backlog of $763.5 million and a 10% year-over-year revenue decrease to $167.6 million. The company faced challenges such as high winds and fires in Southern California, impacting its operations. Despite these hurdles, AeroVironment made progress in its long-term growth strategy, including record orders for Switchblade and Jump-20, and announced a new Utah manufacturing facility to increase capacity. The company also advanced its acquisition of BlueHalo, expected to close in the second quarter of 2025. AeroVironment anticipates a strong fiscal year 2025 with record fourth-quarter revenue, despite transitioning away from Ukraine demand.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.