AeroVironment (AVAV) Stock Forecast & Price Target

AeroVironment Inc has demonstrated strong revenue growth, particularly in its LMS segment, which saw an increase of 68% in the recent quarter, highlighting robust demand for its unmanned systems. Additionally, the uncrewed segment also experienced positive momentum with a 22% revenue growth, indicating a broader trend of expanding market interest in these technologies. Given the heightened focus on security and defense, particularly following geopolitical events like those in Ukraine, AeroVironment is well-positioned to benefit from anticipated increases in funding for unmanned systems in the coming years.

AeroVironment Inc. has reported a sequential decline in its funded backlog, dropping from $400 million to $373 million, which reflects a concerning book-to-bill ratio of approximately 0.7x and 0.9x in consecutive quarters. The company's EBITDA guidance for FY25 was lower than expectations, with the midpoint estimate set at $148 million, indicating possible investor disappointment and concerns over profitability. Additionally, the adjusted gross margins remained flat year-over-year at 45%, and revised revenue estimates for FY25 and FY26 have been lowered to $835 million and $935 million, respectively, signaling potential challenges in achieving financial growth.