Drone maker AeroVironment (AVAV 0.32%) received an upgrade overnight, and the stock is taking off as a result. Shares of AeroVironment are up as much as 13% on Thursday morning based on positive commentary about what lies ahead.
AeroVironment has received a lot of attention since the start of the war in Ukraine. The company's small to midsized unmanned aerial vehicles (UAVs) have been a key piece of the U.S. plan to support the Ukrainian war effort, and the drones have performed well in combat. The conflict has both provided added revenue to AeroVironment and demonstrated the effectiveness of its platforms.
Investors have taken note, sending AeroVironment shares up more than 30% for the year heading into Thursday trading. But the stock of late has been well below its highs for the year on skepticism about how fast new orders might materialize.
Raymond James analyst Brian Gesuale sees the momentum building. On Thursday, the analyst upgraded AeroVironment shares to outperform from market perform and assigned a $100 price target to the stock. Gesuale sees an acceleration of orders since August that should be enough to derisk the consensus estimate and allow AeroVironment to sustain its impressive backlog of future business.
AeroVironment for now dabbles primarily in one corner of the drone sector, focused on smaller UAVs, including some that can be carried in a backpack. The company has used acquisitions to slowly build out its line, including moving into larger, more complex aircraft, a part of the business that is still trying to reach its full potential.
The company has long been a favorite of speculators, which has led to considerable volatility in years past. AeroVironment in 2022 has matured to a point where, as Gesuale notes, it can deliver more consistent results and begin to move away from the quarter-to-quarter volatility. Investors have every reason to be excited about what lies ahead for this drone maker.