Rothschild Redburn initiates AeroVironment stock coverage at Neutral

Rothschild Redburn has started covering AeroVironment (NASDAQ:AVAV) with a Neutral rating and a price target of $165.00, according to a recent note. This suggests a 18% potential upside from the current price of $139.30. Analyst Maggie Schooley highlighted AeroVironment's involvement in growth markets, including loitering munitions, space, and directed energy.

The firm anticipates 2027 to be a transition year with flat earnings and substantial capital investments. AeroVironment specializes in unmanned aerial, ground, and marine systems, and recently acquired BlueHalo, adding counter-unmanned aerial systems and space capabilities. The company aims to reach $3.5 billion to $4.0 billion in revenue by 2030, with an adjusted EBITDA margin of 18% to 20%.

Rothschild Redburn's estimates are conservative compared to the company's projected revenue growth, which surged 84% in the past year. The $165 price target is based on a mix of sum-of-the-parts and discounted cash flow analysis, with the firm expecting positive free cash flow to begin in fiscal 2028. AeroVironment recently reported impressive first-quarter fiscal 2027 results, with revenue of $480.5 million and an adjusted EBITDA of $53.4 million, surpassing analyst estimates. This strong performance has led other firms to upgrade their ratings and set higher price targets.