Growth investments steering AV toward upcoming opps, reiterate Buy

Research evidence excerpt

Growth investments steering AV toward upcoming opps, reiterate Buy

Investment Thesis

We see AV as a beneficiary of increasing defense spending both domestically and abroad. We look favorably on the strong margin

profile of the Small UAS product line, the proven capability of the Switchblade loitering munitions platform in Ukraine and beyond,

and the capabilities BlueHalo has brought to the portfolio. We expect expansion into international markets to continue, serving

as a tailwind to both sales and margins.AEROSPACE

Upcoming Catalysts Price PerformanceAND

■ C-UAS contract awards. $450

■ Expansion of Switchblade manufacturing capacity. $400

■ Further DoW and foreign ally contract awards and task orders. $350

$300DEFENSE $250

Base Case Assumptions: $205 Price Target $200 $150

■ Continued expansion into international markets supporting both topline growth $100EQUITY and margin expansion. Jul-25 Aug-25 Sep-25 Oct-25 Nov-25 Dec-25 Jan-26 Feb-26 Mar-26 Apr-26 May-26 Jun-26 ■ Mid-teen topline CAGR through the end of the decade.

AVAV

■ High-teen adjusted EBITDA margins by the end of decade. S&P 500 (rebased)

Source: FactSet

Upside Scenario Company DescriptionRESEARCH

■ US government approves more allies to acquire Switchblade and Small UAS AV is a defense-tech contractor that

products. operates within unmanned, counter-

■ Revenue mix shifts more toward products than services, which would be a tailwind unmanned, loitering munition, space,

to margins. electronic warfare (EW), and cyber end

■ Awarded additional contracts for Small UAS and loitering munition systems. markets. The company serves customers

■ The US defense budget and supplemental defense spending both continue to grow, both domestically and abroad. It is

specifically in the unmanned domain.