Analyst Expects Slowing US Funding For Ukraine To Impact ThIs Unmanned Aircraft & Robotics Systems Firm: Here's Why

Raymond James analyst Brian Gesuale downgraded AeroVironment Inc AVAV to Outperform from Strong Buy at a lowered price target of $125.00 (from $130.00). 

The analyst is bearish as the ongoing Congressional dysfunction and waning support for Ukraine funding can negatively impact the company.

The analyst notes that U.S. support for Ukraine has moderated since the beginning of the war, which could impact stocks if the trend continues and funding slows. 

While Gesuale expects order and backlog growth to remain strong, he sees potential for deceleration in the coming few quarters. 

Nevertheless, the analyst believes that FY24 consensus estimates would go higher and expects a broader munition inventory restocking cycle, strong product cycle, and global customer expansion to boost FY25 & FY26 estimates.

The analyst believes street expectations remain too low for FY24 but expects the magnitude of revisions to moderate from current levels.

Gesuale estimates FY24 revenue of $705 million (20% above consensus) and adjusted EPS of $3.25. 

For FY25, the analyst estimates revenue and adjusted EPS of $801 million and $3.78, respectively.

Last month, AeroVironment reported Q1 revenues of $152.3 million, up 40% Y/Y and ahead of the consensus estimate of $137.24 million.

Price Action: AVAV shares are trading higher by 3.63% at $108.83 on the last check Monday.