AeroVironment (AVAV) closed the last trading session at $179.47, demonstrating a positive trend with a 2% gain over the past four weeks. While this upward movement is encouraging, the stock could have even more room to grow, according to Wall Street analysts. Their average price target of $225.17 suggests a potential 25.5% upside for AVAV. This target is based on six short-term price estimates ranging from $210 to $245, with a standard deviation of $12.50. This indicates a relatively strong agreement among analysts, although it’s important to remember that price targets can be unreliable indicators of future performance.
Beyond the average price target, a key factor driving optimism about AVAV lies in the strong consensus among analysts regarding the company’s earnings potential. They have been revising their earnings per share (EPS) estimates upwards, indicating a belief that AVAV is poised to exceed expectations. Empirical research consistently shows a strong correlation between positive trends in earnings estimate revisions and short-term stock price gains. This trend is evident in AVAV, where the Zacks Consensus Estimate for the current year has risen by 1% over the past month, driven by upward revisions.
Adding further weight to the bullish outlook, AVAV currently holds a Zacks Rank #2 (Buy). This ranking places AVAV in the top 20% of over 4,000 stocks assessed by Zacks based on four critical factors related to earnings estimates. This ranking, coupled with a proven track record, reinforces the potential for significant upside in the near term.
While the consensus price target should not be treated as a definitive indicator of how much AVAV could rise, the direction of price movement it suggests aligns with the positive trend observed in earnings estimates. This suggests that AVAV could continue on its upward trajectory, driven by strong earnings prospects and analyst confidence.
It’s crucial to remember that price targets should be approached with a healthy dose of skepticism, as they are often based on assumptions and subject to change. Nevertheless, the positive signals from earnings revisions, coupled with AVAV’s strong Zacks Rank, present a compelling case for investors seeking potential upside in the near term.
