AVEX: Flying Under the Radar — No More: Initiating at Outperform, $31 price target

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AVEX: Flying Under the Radar — No More: Initiating at Outperform, $31 price target

nd 2027 165.0E 169.8E 172.1E 175.9E

cost control. EBITDA, Adj 2025 (13.4)A 3.6A 17.8A 29.6A

2026 34.5E 17.8E 17.9E 18.5E

The key debate is on revenue visibility beyond 2026. Revenues from 2027 28.8E 30.8E 31.9E 33.1E

Ukraine are expected to decrease from ~66% of 2026E revenues to zero

in 2027E, and the primary debate for investors is on the backfill of these AllPricedvaluesas ofin priorUSD unlesstradingotherwiseday's marketnoted.close, EST (unless otherwise noted).

revenues in 2027 and visibility on contract awards. While we appreciate the

lumpiness in the business as a less-diversified defense prime contractor and

believe award timing is a risk, we believe the company is well-positioned

to capture meaningful share of the growing UAS market (the FY27 DoW

request calls for ~$74B in drones/counter-drones, ~3x increase YoY). Key

near-term opportunities include US Army Launched Effects, OSD One-Way

Attack, US Army Long Range Precision Strike, and US CENTCOM AOR.

We expect AVEX to be active in M&A. Post-IPO, AEVEX is in a net cash

position of ~$45M, and we believe the balance sheet optionality is a

positive. We believe the company will be active in the M&A market, with

a focus on adding to its technological capabilities and expanding into

adjacent, high-growth defense markets (low-cost cruise missiles, counter-

UAS, USVs, UUVs). We believe a greater diversification of the current

business model would be a net positive but expect investors to be focused

on asset quality.

Our $31 PT is based on a 20x 2028E EV/EBITDA multiple. Based on our

2028 adj. EBITDA estimate, AVEX is currently trading at a ~16x, which is

in line with direct peers, but at a discount to broader defense-tech &