AeroVironment Stock Is En Route to Higher Gains
Technology has transformed our lives. Not only for civilians, but for soldiers at the borders as well. Drones are the latest examples of such ground-breaking technologies. Not only do they help in surveillance and precision targeting, but they also help minimize collateral damage in combat. And this is just one of the many applications of this technology.
A leading player in this space is AeroVironment, Inc. (NASDAQ:AVAV). The company is a major drone supplier for both military and commercial applications. Drones are basically flying robots. They are also known as Unmanned Aerial Vehicles (UAVs) or Unmanned Aircraft Systems (UAS).
The demand for UAS has been going up over the last few years. Drones are mostly associated with the military, which uses them for intelligence gathering and as a weapons platform.
However, there are many commercial applications for this technology. For example, drones working with sensor networks can help in monitoring land and crops. This would result in improved yields. This type of farm management is called precision agriculture.
According to the recent report from MarketsandMarkets Research Private Ltd., the unmanned aerial vehicle drones market is likely to grow from $17.82 billion in 2017 to $48.88 billion by 2023. This represents a compound annual growth rate (CAGR) of 18.32% during the forecast period. (Source: “Unmanned Aerial Vehicle (UAV) Drones Market worth 48.88 Billion USD by 2023,” MarketsandMarkets, last accessed June 28, 2018.)
Moreover, military drones would grab a major pie of this market. Drones help the military with border security and marking targets. The U.S. military has been successfully using drones for many years now.
AeroVironment is well-positioned to gain from this trend, which points toward higher AeroVironment stock prices in the coming years.
The company sells the majority of its UAS and related services to organizations within the United States Department of Defense (DoD), including the U.S. Army, Marine Corps, Special Operations Command, Air Force, and Navy. AeroVironment is one of the top suppliers of drones to the DoD and the new orders have been pushing AVAV stock higher.
The significance of UAS for the military has been growing quickly and does not show any signs of fatigue. AVAV stock should continue to grow further as the demand for these drones is buoyant and the company maintains its leading position with the U.S. DoD.
Life is full of uncertainties. Especially for a soldier at the border.
AeroVironment is the company that minimizes this uncertainty. It develops amazing technologies to better protect the troops, which gives them the confidence to proceed with certainty. With their military drones, the army can monitor the battlefield accurately and neutralize the enemy.
AVAV stock has been in the limelight this week as the company announced its results on June 26, 2018. After the initial hit, the stock gained about seven percent in the last trading session. However, short-term movement aside, what’s more interesting is the future potential of the business. And that points to substantial gains for AeroVironment stock.
AeroVironment announced its fourth-quarter and full fiscal 2018 results. It reported better-than-expected fourth-quarter earnings and revenues. For fiscal 2018, AeroVironment’s revenue grew by 18% to touch $271.0 million. The company also reported record funded backlog of $174.0 million, an increase of 146%. (Source: “AeroVironment, Inc. Announces Fiscal 2018 Full-Year and Fourth Quarter Results,” AeroVironment, Inc., June 26, 2018.)
However, AVAV stock was briefly hit by lower-than-expected revenue guidance for fiscal year 2019. But this weakness did not last long. And the reasons are not hard to fathom.
The company has years of growth ahead. AeroVironment is focused on areas like robotics, sensors, and connectivity. These are the key to tapping large global markets like defense and telecommunications. Going forward, this bodes well for AVAV stock.
Moreover, the company remains a Tier 1 supplier to the U.S. Army and one of the top suppliers to the U.S. DoD. With the increasing defense budget and growing significance of drones, the future appears to be bright for AeroVironment stock.
In addition, the company has been expanding its commercial offerings, which include artificial intelligence and data processing capabilities.
The optimism surrounding AVAV stock has been going up. This helped the stock gain more than 80% over the last one year. The following stock chart shows this phenomenal rise.
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