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Defense technology company AeroVironment (AVAV) just landed a new United States Army contract, which led to a marginal intraday improvement in its stock price on July 20. The company announced that it has been awarded a $117.30 million contract by the U.S. Army for its P550 electric vertical take-off and landing (eVTOL) unmanned aerial system. The UAS is expected to support the Army’s Long Range Reconnaissance program in modern warfare.
What does it mean for AeroVironment’s stock?
About AeroVironment Stock
AeroVironment is an American defense technology company that designs, develops, produces, and supports robotic systems for government and commercial customers. Its portfolio includes uncrewed aircraft, loitering munitions, ground robots, and other autonomous technologies used for surveillance, reconnaissance, and precision operations. The company also works on space, cyber, and directed-energy systems through its broader defense platform. It is headquartered in Arlington, Virginia and has a market capitalization of $7.53 billion.
AeroVironment’s stock has come under pressure as investors have been hit by confidence shocks, including the loss of a key Space Force contract. Over the past 52 weeks, AeroVironment’s stock has dropped 40%, while it is down 35% year-to-date (YTD). The company’s shares had reached a 52-week low of $135.20 on June 25, but are up 15.9% from that level. Over the past month, the stock is up 3.84% and 11.27% during the past five trading days.
Further, AeroVironment’s stock is highly valued. On a forward-adjusted basis, its price-to-earnings (non-GAAP) ratio of 43.74 times is higher than the industry average of 21 times.
Aerovironment Posted Q4 Results with Backlog Climbing
For the fourth quarter of fiscal 2026 (quarter ended April 30), AeroVironment’s revenue increased 133.3% year-over-year (YOY) to $641.62 million, which is higher than the $563.10 million that Wall Street analysts had expected. This growth was driven by a 106% YOY increase in product sales to $498.97 million. The company reported that the combined acquisitions of BlueHalo and Empirical Systems Aerospace contributed $282.30 million of revenue to the reported quarter.
AeroVironment’s gross margin grew from $100.33 million to $202.63 million YOY. However, Q4 gross margin (as a percentage of revenue) declined to 32% from 36%, primarily due to its BlueHalo acquisition and higher amortization costs. The company’s non-GAAP EPS grew 14.3% from the prior-year period to $1.84, surpassing the $1.53 that Street analysts had expected.
As of April 30, funded backlog reached $1.20 billion, up from $726.60 million a year earlier. For fiscal 2027, AeroVironment expects revenue of between $2.125 billion and $2.225 billion, while non-GAAP EPS is projected to be between $3.02 and $3.34.
Wall Street analysts have mixed feelings about AeroVironment’s future earnings. They expect the company’s EPS to climb by 6.3% YOY to $0.34 for Q1 FY2027. For fiscal 2027, EPS is projected to drop 1.5% annually to $3.26, followed by a 29.5% growth to $4.22 in fiscal 2028.
What Do Analysts Think About AeroVironment’s Stock?
This month, AeroVironment’s stock was upgraded from “Market Perform” to “Outperform” by analysts at Raymond James, with a $210 price target. AeroVironment is gaining momentum as the Army negotiates its E-HEL program, a deal Raymond James says could be worth about $500 million. The firm also highlighted the Domestic Shield contract, newer platforms like P550 and Red Dragon, and stronger international demand as key growth drivers.
On the other hand, Canaccord Genuity Group analysts maintained a “Buy” rating on AeroVironment’s stock, but reduced the price target from $280 to $240. Piper Sandler analysts maintained an “Overweight” rating but lowered the price target to $235 from $248. This suggests that analysts are adjusting their expectations in light of current conditions.
AeroVironment has become a popular name on Wall Street, with analysts awarding it a consensus “Strong Buy” rating overall. Of the 22 analysts rating the stock, a majority of 17 analysts have given it a “Strong Buy” rating, two analysts rated it “Moderate Buy,” while three analysts are taking the middle-of-the-road approach with a “Hold” rating. The consensus price target of $239.65 represents a 53.1% upside from current levels. The Street-high price target of $355 reflects a 126.7% upside.
Key Takeaways
The U.S. Army order can add to near-term revenue, strengthen backlog, and validate the P550 platform for wider defense use. Therefore, it might be wise to keep a close eye on the stock for now.
On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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