Shares of defense contractor AeroVironment (AVAV) plunged 20% in premarket trading on Wednesday after the company slashed its full-year guidance in the wake of Donald Trump ending military support for Ukraine.
AVAV, which is a large supplier of guided munitions called Switchblade to Ukraine, cut its guidance despite a solid backlog of orders. AVAV last year also won a $990 million five-year contract to deliver the U.S. Army with Switchbade, a loitering guided bomb that can hang in the air until the operator finds a target. According to AeroVironment, just $40 million of Switchblade 600 munitions destroyed $3 billion in Russian military assets.
But the company said revenue for the third quarter of Fiscal 2025 was $167.6 million, a decrease of 10% compared to the $186.6 million in the year-ago quarter. For the full year the company expects sales to be about $788 million, down from about $810 million in prior guidance and short of the $820 million anticipated by analysts.
Ukraine Military Aid Pause a Factor
President Trump’s shaky support for Ukraine seemed to weigh on the outlook as the company warned of orders related to the conflict with Russia declining materially this year.
While the company has been “proactively” preparing for a pivot by the administration in its support for Ukraine, the decision by the U.S. government to pause military aid to the country will “directly impact” Q4 deliveries. For the full fiscal year, AVAV expects all shipments to Ukraine to represent only 17% of revenues compared to 38% of revenues last fiscal year.
“Ukraine will represent only about 6% of Q4 revenues and is not material to our future growth plans,” said CEO Wahid Nawabi.
While the company lowered guidance, it is still on track to achieve more than 10% revenue growth and $1 billion in orders in fiscal year 2025. And it’s worth noting that sales of around $800 million is about double where AVAV was when Russia invaded Ukraine.
Meanwhile the company also said the Los Angeles wildfires affected its facilities in California as it faced extended periods of forced shutdowns and power outages.
Yesterday, AVAV was among 15 U.S. companies added to China’s export blacklist as part of wide-ranging measures taken in retaliation to the White House raising tariffs on Chinese imports.
Is AVAV a Good Stock to Buy?
Overall, among four Wall Street analysts offering 12-month price targets in the last three months, AVAV has a Strong Buy consensus rating, based on three Buys and one Hold. The average AVAV price target of $227.50 implies about 60% upside, though the figures could change in the wake of the earnings release.
See more AVAV analyst ratings