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AeroVironment shares jump on 3Q results, upgrade

NEW YORK (AP) -- Shares of AeroVironment Inc. soared Wednesday after the unmanned aircraft manufacturer reported better-than-expected third-quarter results and an analyst upgraded the stock.

The Monrovia, Calif., company said late Tuesday its third-quarter net income jumped 32 percent, buoyed by stronger sales at its efficient-energy-systems segment and higher gross margins. The results beat analysts' forecasts. It also expected 2013 earnings mostly above what Wall Street is expecting.

In a note to clients, Sterne Agee analyst Peter Arment lifted his rating on the company's stock to "Neutral" from "Underperform," citing the strong results, outlook and expectations of a $1 billion order in the coming months to make drones. Besides unmanned aircraft, the company also makes electric vehicle test systems, solar power converters and electric vehicle-charging stations.

But despite the many "irons in the fire," Arment said he's concerned over the demand for these products because of government defense budget cuts and a slow adoption rate of electric vehicles.

KeyBanc Capital Markets analyst Michael F. Ciarmoli agreed, citing growth concerns as he held a "Hold" rating on the stock.

"Shares may open strong today, but we suspect the stock will ultimately retreat back to the $20 level as what appeared to be a strong beat actually becomes perceived as more of an in-line type quarter," he wrote. He recommends investors hold out until the stock falls back to between $16 and $18.

Investors, though, brushed off those concerns. The stock shot up 16 percent, or $3.24, to $23.50 in afternoon trading. It has traded between $19.25 and $33 in the past year.