AeroVironment (AVAV) Stock Rises 5% on Army Contract and Analyst Upgrade

TLDR

• AeroVironment won a $117 million U.S. Army contract for its P550 Group 2 reconnaissance drone
• A smaller contract was also awarded for the Red Dragon attack drone
• Raymond James upgraded AVAV from Underperform to Market Perform
• 84% of analysts rate the stock Buy, with an average price target of ~$312–$318
• AVAV had been down ~25% over the prior three months before Monday’s move

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AeroVironment had a couple of things going for it Monday morning.

The U.S. Army awarded the company a $117 million contract for its P550 Group 2 reconnaissance drone on Friday. A separate, smaller deal was also handed out for the Red Dragon attack drone.

AeroVironment, Inc., AVAV

William Blair analyst Louie DiPalma called the contracts meaningful, pointing out that the Army is expected to spend over $1 billion on long-range reconnaissance systems over the next decade. He also flagged that the initial Red Dragon contract could grow into something much larger.

DiPalma has a Buy rating on the stock and no set price target.

AVAV opened Monday at $197.72, up roughly 5% in early trading. That compares to the S&P 500, which was up around 2%, helped by news that the U.S. and Iran had held talks.

Analyst Upgrade Adds to the Momentum

Raymond James analyst Brian Gesuale upgraded AVAV from Underperform to Market Perform on Monday, citing a more balanced risk/reward after the stock’s recent slide.

He noted the stock had seen multiple compression and negative estimate revisions, and that those factors now roughly offset the ongoing concerns. He doesn’t have a price target on the stock.

Gesuale added he’d want to see more backlog growth before turning more positive.

Coming into Monday, AVAV had dropped nearly 25% over the prior three months. That pullback was partly tied to the Defense Department reopening an antenna supply contract that had originally gone to AeroVironment subsidiary BlueHalo.

Stock Trading Well Below Peak

AVAV was trading around 50 times forward earnings as of Monday, down from close to 100 times just six months earlier.

The stock’s 12-month high is $417.86, and the 200-day moving average sits at $291.46 — well above current levels.

The most recent quarterly results, reported March 10, came in below expectations. EPS was $0.64 against a consensus of $0.68, and revenue of $408 million missed the $487 million estimate. Revenue was still up 143% year-over-year.

For fiscal 2026, the company has guided for EPS in the range of $2.75 to $3.10.

Despite the recent weakness, Wall Street broadly remains positive on the stock. Of the analysts covering AVAV, 84% rate it Buy, well above the 55–60% typical for S&P 500 names. The average price target across analysts is around $318.

The Army contract awarded Friday, if it leads to the larger follow-on contracts analysts are expecting, could become a more substantial revenue driver over the coming years.

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