By GILLIAN RICH, INVESTOR’S BUSINESS DAILY
Commercial drone testing is expanding, and AeroVironment’s (NASDAQ:AVAV) fourth-quarter results are seen benefiting from the new regulations in the industry.
Analysts polled by Thomson Reuters are expecting AeroVironment to post EPS of 22 cents vs. a loss of 32 cents in the year-ago quarter when it reports Tuesday. Revenue is seen rising 28.7% to $69.6 million.
Shares fell 1.5% to 31.43 in the stock market Monday.
Last month, AeroVironment’s Puma AE drone became the first unmanned aircraft system to provide commercial service over America, flying over BP’s (NYSE:BP) land operations in Prudhoe Bay, Alaska, after receiving approval from the Federal Aviation Administration.
“These surveys on Alaska’s North Slope are another important step toward broader commercial use of unmanned aircraft,” Transportation Secretary Anthony Foxx said in a news release.
The FAA has until September 2015 to demonstrate how drones could fly safely with commercial and military planes in national airspace. But the process has been slow. The FAA has issued only two approvals for commercial purposes and doesn’t expect full drone integration until the end of the decade.
So no Amazon (NASDAQ:AMZN) drones delivering books or clothes soon, but other commercial and tech firms are eyeing the technology. In April, Google (NASDAQ:GOOGL) bought Titan Aerospace for its high-altitude, solar-powered drones.
Drones are shaping up to be a multibillion-dollar industry.
According to a new study by Teal Group, worldwide UAV spending is expected to double over the next 10 years from $5.3 billion to $11.6 billion annually.
“The UAV market is evolving; it is becoming an increasingly international market as it grows,” said Philip Finnegan, Teal Group’s director of corporate analysis and an author of the study. “UAVs have proved their value in Iraq and Afghanistan and are being sought by a growing number of militaries worldwide.”
The U.S. dominates the market for developing drones, and Teal Group expects the U.S. will account for 65% of development, testing and evaluation on UAV tech over the next 10 years and for 51% of procurement.
AeroVironment’s Aerospace/ Defense group is ranked No. 104 out of the 197 industry groups IBD tracks.
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