Avio celebrates better-than-expected results; analysts reaffirm positive ratings

(Il Sole 24 Ore Radiocor)- AAvio fell on the Milan Stock Exchange following the release of third-quarter results that exceeded expectations. The group led by Giulio Ranzo released its results on the eve of trading, with the markets initially giving the figures a lukewarm reception, causing the share price to slip by 3%, before recovering to close up 0.25%. In today’s session, it has surged to the top of the index.

More specifically, the group posted a strong performance in terms of both growth and profitability. Revenue rose by 15.1% to €133.7 million, 6.2% above Intermonte’s estimate, whilst adjusted EBITDA rose to 6.4 million, 15.9% above expectations, with the margin improving to 4.8% from 4.3% in the same period last year. Commercial momentum also exceeded expectations, with order intake of 79 million compared to the estimated 48 million, bringing the backlog to 1.99 billion against estimates of 1.97 billion. Avio then reaffirmed its targets for 2026, which forecast net revenue of between 560 and 590 million, adjusted EBITDA of between 29 and 37 million, net profit of between 8 and 13 million, and a year-end order backlog of between 2 and 2.1 billion.

According to Intermonte analysts, although the mid-point of the revenue guidance suggests a year-on-year decline in the fourth quarter – in contrast to the growth recorded since the start of the year – the guidance primarily reflects management’s traditional cautious approach. “Medium- to long-term growth opportunities remain well above the assumptions incorporated into the Business Plan”, argue the experts, who believe that the messages from management are positive and bolster the group’s growth prospects, particularly in the United States, “where visibility on programmes, customers and potential volumes has increased significantly over the past year”. During the earnings conference call, in fact, the chief executive, Giulio Ranzo, said that the momentum coming from US defence programmes – and in particular the US Navy’s latest major contract with the Raytheon Group, worth $24.4 billion for interceptor missiles – has made it clear “that there is now a growth opportunity that could extend beyond the programmes” Avio already has underway with Raytheon itself, with Lockheed Martin and with the US Army, and that therefore “volumes could exceed those forecast in our original plan”. “We continue to regard Avio as one of the most attractive ways to gain exposure to the structural growth of the space and defence markets,” say the analysts at Intermonte, who have an ‘Outperform’ rating on the share and a target price of 39 euros. “The growing number of commercial opportunities, particularly in the US defence sector, is significantly increasing visibility on the group’s future growth potential, gradually shifting the focus towards execution,” the experts continue.

Banca Akros also maintains a positive outlook on the share, confirming its ‘Buy’ recommendation and target price of 40 euros, but notes that most of the potential for value creation is expected only after 2028. For this reason, downward revisions to estimates of the order book are possible, whilst profitability forecasts remain unchanged.