Piper Jaffray Upgrades AeroVironment On Valuation, Growth Opportunities

The recent pullback in AeroVironment, Inc’s AVAV shares offers a “more compelling” entry point for investors, while the company has plans for various growth initiatives through fiscal 2020 and beyond, according to Piper Jaffray.

The Analyst

Piper Jaffray’s Troy Jensen upgraded AeroVironment from Neutral to Overweight raising the price target from $66 to $76.

The Thesis

AeroVironment is poised to benefit from a shift in the U.S. defense budget toward unmanned aircraft and, given the company’s recent focus on overseas expansion, its international defense sales could grow faster than domestic sales, Jensen said in the note.

He added that there is high visibility into AeroVironment’s performance for the rest of fiscal 2020, as 75% of its guidance is already either booked or in backlog.

Citing the successful initial launch of HAWK30 as an important milestone under AeroVironment’s HAPSMobile joint venture with Japan's SoftBank Group Corp SFTBF, the analyst said that this provides visibility over the next several quarters and represents “a significant long-term opportunity.”

AeroVironment launched Puma LE (Long Endurance) earlier this week. Although this launch was largely anticipated, it extends AeroVironment’s leadership in the UAV (Unmanned Aerial Vehicle) space and Puma LE could be “an important new product cycle for the company,” Jensen wrote.