AVAV - AeroVironment FY2024 Earnings: Switching Gears On Switchblade Demand

2024-06-27 00:51:00 ET

Summary

• AeroVironment beat expectations with a surge in sales of Switchblade drones, driving revenue growth in their Loitering Munition Systems segment.
• Margins and profitability significantly improved, with gross margins rising to ~40% and adjusted EBITDA increasing by 42%.
• Despite strong demand, potential headwinds such as heightened competition and delays in contracts lead to a recommendation to hold the stock for now.

Investment Thesis

Military drone maker AeroVironment (NASDAQ: AVAV ) reported their full-year FY24 earnings results today, which beat expectations on the top and bottom lines. The company reported a huge surge in sales in their LMS segment (Loitering Munition Systems) due to the sustained demand for their Switchblade drones, which continued to propel the company’s sales forward.

Since the start of the year, I have been bullish on AeroVironment. In my last coverage , I valued AeroVironment at ~$210. The company’s stock extended 6% beyond my previous price target, before giving up some of its gains to eventually settle at ~$192, right before earnings....

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