AI-Powered Robotics And Mars Missions Ignite This Stock

From an expanded push into robotics powered by artificial intelligence, to deals with NASA’s Jet Propulsion Laboratory and the U.S. Army, AeroVironment (AVAV) navigates the heavens with intelligent drones, sensors and advanced communications systems. That has AVAV stock on the launchpad for a breakout.

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Based in the Washington suburb of Arlington, Va., AeroVironment produces multi-domain robotic systems powered by AI, as well as unmanned aircraft and ground systems. It also provides the software analytics and actionable intelligence crucial for clients to make accurate and timely decisions. The company sells its products to more than 50 U.S. allies.

AeroVironment’s lineup includes unmanned aircraft to give warfighters beyond line-of-sight intelligence and unmanned ground vehicles that protect emergency responders and the public. It also provides the software analytics and high-performance networks that extend situational awareness and enhance communication of actionable intelligence.

Last month, AeroVironment completed its acquisition of Tomahawk Robotics, a leader in AI-enabled robotic control and integrated communications systems. Earlier this year, AeroVironment landed contracts with NASA’s Jet Propulsion Laboratory and the U.S. Army.

The $10 million deal with NASA’s JPL calls for AeroVironment to codesign and develop flight systems for Mars Sample Recovery Helicopters. The contract with the U.S. Army, worth more than $64 million, is for procurement of AeroVironment’s Switchblade 300 loitering missile systems. The Switchblade 300 systems have been deployed by the U.S. Army for more than a decade.

AeroVironment Spies 113% Growth On The Horizon

On Sept. 5, the robotics company reported results for the first quarter of fiscal 2024, which ended July 29. AeroVironment posted revenue of $152.4 million, marking a 40% year-over-year increase. Building on its recent rebound, the company has now generated sales growth ranging from 40% to 49% over the last three quarters.

Earnings growth also has perked up. After delivering 250% earnings growth in the third quarter of fiscal 2023, AeroVironment posted earnings of $1 per share for fiscal Q4. For the full year, analysts forecast earnings growth of 113% to $2.69 per share.

As of July 29, the firm’s funded order backlog stood at $539.7 million, compared with $424.1 million as of April 30. For the full year, AeroVironment now expects revenue of $645 million to $675 million and net income of $51 million to $59 million. The outlook does not reflect the impact of the Tomahawk Robotics acquisition.

AVAV stock sports the highest-possible 99 Composite Rating. That tops all its aerospace and defense industry peers, including AAR (AIR), Woodward (WWD) and Curtiss-Wright (CW).

AeroVironment is on deck to report fiscal 2024 Q2 earnings on Dec. 5.

AVAV Stock Readies Breakout As RS Line Enters Stratosphere

With its relative strength line soaring, AVAV stock is closing in on a 124.33 buy point in a cup pattern.

AeroVironment began forming this base after a huge gap up on earnings the prior quarter. The day after it reported, the stock catapulted more than 20% on volume that was 985% higher than normal.

While forming its current cup, AVAV stock gave back some of those gains but held support at its 50-day moving average.

Fellow defense stocks are showing strength in a troubled market amid the Israel-Hamas war and other geopolitical tensions. Keeping the market risks in mind, look for AeroVironment to launch a breakout into buy range.

Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.

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