AeroVironment Inc. (AVAV): Investor day takeaways, earnings and model updates; Buy

Research evidence excerpt

AeroVironment Inc. (AVAV): Investor day takeaways, earnings and model updates; Buy

Goldman Sachs AeroVironment Inc. (AVAV)

n Precision Strike & Defense Systems. The company estimates revenue will grow at a

15%-20% CAGR. This is expected to be the largest driver of revenue growth in

absolute dollars over the next four years. The company is investing to expand its

Switchblade and Titan series production capacity, to meet higher expected demand.

The investment in the company’s Salt Lake City facility, is ~$20mn investment to

scale Switchblade production up to ~$2B of additional capacity.

n Space & Direct Energy. The company estimates revenue will grow at a 29%-33%

CAGR. The company believes direct energy has the potential to take the biggest

portion of the counter-UAS opportunity, and LOCUST is well positioned. During its

recent marine demonstration, LOCUST defended against incoming drones with a

100% success rate. The company estimates each shot cost <$10, and noted that

when connected to continuous power, LOCUST has an unlimited magazine.

n UAS. The company estimates revenue will grow at a 13%-19% CAGR. The company

sees strong demand and named programs from the Army, the Navy, and the Marine

corps for MRR and LRR UAS. The company expects growth to be led by P550, Jump

20-X and common control capabilities.

n Cyber & Mission Systems. The company estimates revenue will grow at a 7%-10%

CAGR. The company noted the business has been under pressure the last few years

due to 1) DOGE, and 2) government shutdowns, but views the 7% CAGR as realistic

going forward between market growth opportunities and synergies between

products in the company’s portfolio.

n Other. The company estimates revenue will grow at an 8%-18% CAGR. Growth