AeroVironment Plunges 27.5% on Q2 Revenue Miss, Lowers FY22 Guidance

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Shares of defense contractor AeroVironment, Inc. (AVAV) closed 27.5% down on Tuesday after the company’s fiscal second-quarter revenues missed estimates, and it lowered its Fiscal Year 2022 guidance.

Shares were trading 1.6% down, at the time of writing, in the pre-market trading session on Wednesday.

Headquartered in Virginia, AeroVironment designs, develops, manufactures, supports and operates unmanned aircraft systems and electric transportation solutions.

Earnings and Revenue

For the fiscal second quarter ended October 30, adjusted earnings per share (EPS) came in at $0.78, compared to $0.48 reported in the second quarter of the last fiscal year and the Street’s estimate of $0.62.

Revenue increased 32% year-over-year to $122 million but fell short of analysts’ expectations of $130.83 million.

Revenue Segments

Product sales totaled nearly $71 million, up from $65.5 million in the previous year. Contract services revenue rose to $51 million from $27.1 million in the year-ago quarter.

Other Highlights

Gross margin decreased to 35% from 44% in the second quarter of Fiscal Year 2021, and operating income declined $10.6 million year-over-year to $3.3 million. (See Insiders’ Hot Stocks on TipRanks)

CEO Comments

The President and CEO of AeroVironment, Wahid Nawabi, said, “While we achieved second quarter and first-half results in line with our expectations, headwinds to our business have intensified in recent months, requiring us to reduce our full-year outlook.”

“The negative impact from supply chain delays, extended procurement cycles due to the global COVID-19 pandemic, slower decision making in Washington tied to Continuing Resolution related budget uncertainties and staffing shortages have prevented us from realizing the growth and bottom-line results expected at the start of this fiscal year,” he added

“We are diligently working to manage expenses and other challenges in light of our revised outlook but are realistic regarding the lack of visibility within this ongoing environment,” Nawabi said.

FY22 Guidance Reduced

The company has slashed its guidance for Fiscal Year 2022 and expects revenue to range from $440 million to $460 million, and adjusted EPS to lie between $1.23 and $1.37.

Further, adjusted EBITDA is anticipated to come in the range of $59 million to $65 million.

Price Target

Overall, the stock has a Strong Buy consensus rating based on 2 Buys and 2 Holds. The average AeroVironment price target of $93 implies 60.4% upside potential. Shares have lost 48.6% over the past six months.

Hedge Funds’ Confidence

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in AeroVironment is currently Very Positive, as the cumulative change in holdings across all six hedge funds that were active in the last quarter was an increase of 425,000 shares.

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