What happened

Tiny defense-contracting company AeroVironment (AVAV 1.50%) flapped its wings and flew higher in early trading on the Nasdaq Tuesday, rising 13.5% through 10:45 a.m. ET. Investors can thank an upgrade to strong buy from investment-bank Raymond James (RJ) for the move.

So what

This is somewhat surprising, as it comes less than a month after AeroVironment disappointed investors with a sizable 20% earnings miss in its fiscal Q3 2023 earnings report. But as it turns out, Raymond James isn't too concerned about 2023 earnings for AeroVironment, preferring to look ahead to fiscal 2024 instead. And for AeroVironment, fiscal 2024 could be grand.

Already, the company is outperforming analyst expectations for sales growth -- which was up 49% year over year last month. (It was only AeroVironment's profits on those sales that disappointed.) Moreover, the company's management pointed out that its backlog in Q3 grew 83%. This was an impressive number and indicative of even stronger revenue (and perhaps earnings?) growth to come.

Now what

Taking a cue from that guidance, Raymond James today announced a "high-on-the-Street FY 24" forecast for AeroVironment, reports ratings watcher StreetInsider. Criticizing its investment-banking peers for "underappreciating recent order momentum" at the company, RJ argues that the company will solve its supply chain constraints soon and convert backlog to sales faster than anyone else expects. RJ is positing fiscal 2024 sales of $705 million for the company -- 21% more than the consensus number and an astounding 58% more than the company booked in sales last year.

Even better, just taking the consensus sales number as a starting point, Street forecasts have AeroVironment flipping from a fiscal 2022 loss to a fiscal 2023 profit this year and growing that profit to $1.41 per share in fiscal 2024. RJ's above-consensus forecast for sales, meanwhile, would seem to imply that AeroVironment can earn even more than $1.41 per share next year.

Admittedly, the company will probably have to earn a lot more than $1.41 to justify its rich $105 share price (which currently has AV stock trading for a staggering 75 times earnings). Raymond James seems confident that will happen, but as for me ... at the company's current valuation, I think I'd rather wait and see before buying in.