September 8, 2023: Based on better-than-anticipated financial first-quarter outcome, drone manufacturer AeroVironment’s shares rallied over 25% on Wednesday.
Wednesday’s gain put the stock up 39% for 2023. That would make it the most considerable one-year increase since 2020, when it popped 40.75%.
The Virginia-based weapons manufacturer earned $1 per share on revenue of $152 million. Analysts polled by LSEG expected a profit of 26 cents per share on revenue of $129 million.
The results led Baird analyst Peter Arment to upgrade the stock to outperform. He also hiked his price target to $128 from $95 per share, implying an upside of more than 34% from Tuesday’s close. He said that adopting AeroVironment’s Switchblade drone will be a crucial driver for the company.
“We expect continued order flow for Switchblade, especially new variants, as special operation forces build up initial inventory levels before the program enters a more steady state of volume once it is a program of record. The program of record date was established in FY20.”
In the weeks following Russia’s full-scale invasion of Ukraine, the Pentagon announced its decision to equip Kyiv with 100 of AeroVironment’s Switchblade drones.
The deployment of the single-use weapon, dubbed a “kamikaze drone,” to the fight in Ukraine may be one of the most significant uses of it in combat. It is unclear how often the U.S. military has utilized the Switchblade drone in theater.
AeroVironment makes the Switchblade 300 and 600 equipped with cameras, navigation systems, and guided explosives. The weapons can be designed to automatically strike targets that are away or can loiter above a target until contacted by an operator to attack.
The 300 variant is designed to strike small targets, weighs a little more than 5 pounds, and has a range of 10 miles. The 600 version of the weapon is created to destroy tanks and different armored vehicles. It weighs over 120 pounds and has a range of more than 40 miles.
The system is considered cheaper than the combination of firing a Lockheed Martin Hellfire missile from General Atomics’ MQ-9 Reaper drone. According to an NBC News report, the Switchblade 300 is estimated to cost $6,000.
Since the inception of the Kremlin’s war last year, the U.S. has unleashed a war chest worth more than $43.2 billion for Ukraine.