Shares of AeroVironment (NASDAQ:AVAV) — which specializes in unmanned aircraft systems — are skyrocketing on Wednesday. Late yesterday, the company posted strong results for its fiscal first-quarter earnings report. Management also lifted its revenue guidance based on its order growth. Subsequently, options activity is lighting up for AVAV stock, which is up about 20% as of this writing.
According to Investor’s Business Daily, AeroVironment posted adjusted EPS of $1 in the first quarter. This bottom-line figure compared very favorably to a loss of 10 cents in the year-ago quarter. Additionally, revenue soared 40% to $152.3 million in Q1. Both of these stats beat analysts’ consensus targets for EPS of 26 cents and sales of $128.5 million.
Management also reported that the company’s backlog jumped 27% to $539.7 million, well up from $424.1 million in fiscal Q4. Additionally, AeroVironment “added $270 million in new bookings during the quarter, with strong growth across all of its business segments.”
Even better, the firm bumped up its revenue guidance due to rising demand. For full-year sales, AeroVironment now anticipates a range between $645 million and $675 million. Previously, it had guided for sales between $630 million and $660 million.
AVAV Stock Delights Options Traders
Unsurprisingly given the encouraging news, AVAV stock is also lighting up the screen for unusual options activity. Specifically, Barchart’s screener for unusual stock options volume pegs AeroVironment as one of the most-targeted entities.
At time of this writing, options volume reached a total of 7,237 contracts against an open interest reading of 9,079 contracts. Looking at the transactional breakdown, call volume hits 4,190 contracts against put volume of 3,047 contracts.
Interestingly, since June 29, 2023, data from Fintel also indicates that implied volatility (IV) for AVAV stock options has been steadily rising. All other things being equal, IV can indicate rising expectations for mobility of the underlying contract, resulting in higher option pricing.
Such heightened interest wouldn’t be unexpected. Per IBD, AeroVironment announced plans to acquire Tomahawk Robotics for $120 million on Aug. 22. Tomahawk’s artificial intelligence (AI) enabled robotics control systems should help AeroVironment improve its unmanned systems, potentially lifting demand for the long term.
Why It Matters
At the moment, AVAV stock carries a unanimous strong buy view among four analysts on TipRanks. However, the average price target of $123.25 per share represents just about 7% upside potential. With today’s dramatic swing higher, shares have gained about 35% on a year-to-date (YTD) basis.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
