BTIG analyst Andre Madrid reiterated a Buy rating on AeroVironment (AVAV – Research Report) yesterday and set a price target of $225.00.
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Andre Madrid gave his rating based on several factors that highlight the strategic advantages of AeroVironment’s acquisition of BlueHalo. Despite the fact that the acquisition is not expected to immediately enhance adjusted EBITDA margins, the deal is valued attractively with a purchase multiple that is significantly lower than AeroVironment’s historical trading level. This acquisition provides AeroVironment with a diversified portfolio, giving it exposure to key sectors such as Space, Counter-Unmanned Aircraft Systems (C-UAS), Electronic Warfare (EW), Cybersecurity, and Unmanned Maritime Systems, which could prove beneficial in the long term.
Moreover, the anticipated revenue growth from the acquisition is impressive, with a projected compound annual growth rate (CAGR) of 15.4% over five years, which surpasses the previously established organic growth expectations. This growth outlook, combined with the strategic negotiation that reduced BlueHalo’s equity interest to 39.5%, demonstrates AeroVironment’s proactive approach in strengthening its market position and expanding its customer base both domestically and internationally. As such, the analyst believes these factors collectively justify a Buy rating for AeroVironment’s stock.