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AVAV Stock Sinks Despite Higher AeroVironment Outlook As Military Drone Use Grows| Investor’s Business Daily

AeroVironment (AVAV) raised its full-year guidance late Tuesday after crushing earnings estimates for its fiscal second quarter. AVAV stock plunged Wednesday.

While AeroVironment hiked its earnings outlook for the year, its guidance fell below consensus views despite the sizable Q2 beat.

The company tied higher outlook to “near-term demand dynamics.” The drone maker also cited “more frequent use of distributed, intelligent, multi-domain unmanned systems” (commonly known as drones) on battlefields.


AeroVironment Earnings

Estimates: Analysts, on average, expected AeroEnvironment to earn 62 cents per share on revenue of $53.2 million, according to FactSet.

Revenue was seen rebounding 53% year over year and accelerating from 40% gains in each of the prior two quarters. In the year-ago quarter, the company reported earnings per share of $0.

Results: The company earned 97 cents per share, well above views. Revenue surged 62% to $180.8 million, also above estimates.

Outlook: The company late Tuesday said it now expects EPS of $2.46-$2.70 vs. prior expectations for $2.30-$2.60. The revised guidance was below analyst consensus for $2.72 ahead of Q2 results.

AeroVironment now sees revenue of $685 million-$705 million, including the recent Tomahawk Robotics acquisition. That was up from its previous view for $645 million-$675 million. The analyst consensus was for $676.6 million ahead of Q2 results.

After Q2 results, analysts expect full-year EPS of $2.77 and sales of $688.7 million, FactSet shows.

AVAV Stock Slides Back Into Buy Zone

Shares of AeroVironment stock sank 10.6% to 126.40 on the stock market today. They closed up 0.8% to 141.23 Tuesday.

AVAV stock had run up more than 15% from a breakout past a 123.34 cup-with-handle buy point in early November. Shares returned to the 5% buy range Wednesday morning.

Ahead of the earnings report, AeroVironment stock struck a 10-year high on Monday.


Drone Maker Gains

Analysts say AeroVironment is well-positioned to benefit from increasing global defense budgets.

The Arlington, Va.-based company sells spy drones, as well as loitering munitions drones.

Its Switchblade 600s are a type of loitering munitions drone, also called “suicide drones.” The unmanned aircraft “loiter” until a target is identified, then self-destruct when they smash into their targets and explode.

The company has seen orders pile up amid the Russia-Ukraine war. Israel has also been a source of recent demand.

Over the past three months, AVAV stock surged about 23%. It’s up around around 65% year to date.


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