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Investing.com - William Blair maintained its Outperform rating on AeroVironment (NASDAQ:AVAV) on Wednesday, citing reduced Ukraine exposure risk and strong growth prospects. The company’s stock has shown remarkable momentum, delivering a 45% return over the past six months and currently trading near its 52-week high of $270.87. According to InvestingPro data, analysts expect continued sales growth this year, with the company maintaining a healthy financial position.
The defense technology company is expected to achieve 13% pro forma organic revenue growth, comparable to competitor Kratos, according to William Blair. The firm noted that AeroVironment shares have strengthened following NATO’s defense spending commentary and potential acceleration of BlueHalo’s $1.4 billion contract with the U.S. Space Force. InvestingPro analysis shows the company operates with moderate debt levels and maintains strong liquidity, with a current ratio of 3.52x indicating robust short-term financial health.
William Blair highlighted that Ukraine sales are projected to represent only 5% of AeroVironment’s total revenue, significantly reducing a risk factor that previously caused investor confusion and a sell-off in shares. The company now has 70% visibility on its guidance, which is higher than last year despite being lowered from January projections.
The research firm pointed out that AeroVironment traded at a premium to Kratos last November, at 33 times forward-year EBITDA versus 28 times. With diminished Ukraine exposure concerns, William Blair believes investors are becoming comfortable again with valuing AeroVironment at least in line with Kratos.
Based on this comparative valuation approach, William Blair suggests AeroVironment shares could see an additional 19% upside over the next year from current levels. However, InvestingPro analysis indicates the stock is currently trading above its Fair Value, with high valuation multiples across various metrics. For deeper insights into AVAV’s valuation and 20+ additional ProTips, including detailed financial health scores and comprehensive analysis, check out the Pro Research Report available on InvestingPro.
In other recent news, AeroVironment reported strong fourth-quarter earnings for fiscal year 2025, significantly surpassing analysts’ expectations with an earnings per share (EPS) of $1.61, compared to the forecasted $1.40. The company also exceeded revenue projections, reporting $275 million, which was notably higher than the anticipated $242.14 million. Stifel maintained its Buy rating and $240 price target on AeroVironment stock following these better-than-expected results. The revenue outperformance was primarily driven by the company’s Loitering Munitions segment, which generated $138 million, significantly above estimates.
Additionally, AeroVironment provided guidance for fiscal year 2026, factoring in its BlueHalo acquisition, with projected revenue between $1.9 billion and $2 billion. Raymond (NSE:RYMD) James raised its price target for AeroVironment to $225 from $200, maintaining a Strong Buy rating, citing the company’s strategic positioning in the defense sector and its growth trajectory post-BlueHalo merger. The firm projects AeroVironment to grow at more than a 15% compound annual growth rate over the next three years. AeroVironment’s portfolio is noted for its suitability to meet demands with its directed energy and counter-unmanned aircraft systems.
The company reported record fiscal year revenue of $821 million, a 14% increase year-over-year, and ended the fiscal year with a funded backlog of $726 million, an 82% increase from the previous year. Looking ahead, AeroVironment expects strong growth in its Autonomous Systems and Space, Cyber, and Directed Energy segments. These developments highlight AeroVironment’s robust performance and strategic growth initiatives.
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