03:57 PM EDT, 06/25/2024 (MT Newswires) -- AeroVironment's ( AVAV ) fiscal fourth-quarter results may show market share gains on major defense programs, though a mix shift toward loitering munition systems and away from small unmanned aircraft systems could drag on margins, RBC Capital Markets said in a note emailed Tuesday.

The brokerage said it is now is modeling for revenue of $188.6 million in the fourth quarter, up from the $186 million AeroVironment ( AVAV ) reported in the prior-year period and narrowly ahead of the consensus of $188.5 million.

AeroVironment ( AVAV ) is scheduled to report fourth-quarter results after the market closes on Wednesday.

The brokerage lifted its price target on AeroVironment's ( AVAV ) stock to $200 from $185 and reiterated outperform rating.

"In our view, [AeroVironment ( AVAV )] has made positive progress in winning additional share on major defense programs for its Switchblade and [unmanned aircraft systems] products, but we expect a greater mix of [loitering munition systems] to be a headwind to margins," RBC analyst Ken Herbert said.

RBC projects adjusted earnings per share will fall to $0.17 from $0.99 the year before, which is a bigger decline than the $0.21 consensus.

Unmanned systems revenue is expected to dip to $117.3 million from $122.2 million last year, according to Herbert's analysis. The consensus is for smaller unmanned systems revenue of $107.3 million. The brokerage is below consensus for both loitering munition systems at $55.2 million and for MacCready Works at $16.1 million.

The mix shift away from small unmanned aircraft systems could also potentially lower out-year expectations, Herbert said.

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