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Why AeroVironment (AVAV) Is Up 29.9% After Securing US$887 Million In Long-Term Army Drone Deals

Simply Wall St · 5d ago
  • AeroVironment recently secured U.S. Army contracts worth about US$887 million for unmanned aircraft and counter-drone systems, adding to a multi-year order pipeline supported by the BlueHalo acquisition and a growing backlog of US$1.40 billion in new bookings.
  • These long-duration defense awards enhance revenue visibility through 2031 and have coincided with heightened institutional interest and unusually active, mostly bullish options trading in the stock.
  • Now, we'll assess how this large, multi-year U.S. Army drone contract reshapes AeroVironment's investment narrative and future business profile.

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AeroVironment Investment Narrative Recap

To own AeroVironment, you need to believe its focus on unmanned systems, counter-drone technology and open-architecture platforms can convert large defense programs into durable, profitable growth. The new US$887 million U.S. Army awards materially reinforce the near term catalyst of backlog and revenue visibility, but they also sharpen the key risk around heavy reliance on U.S. defense budgets and program priorities.

The recent P550 uncrewed aircraft systems award, structured as a three-year OTA with modular, open-architecture design, looks especially relevant here. It complements the larger Army contract by embedding AeroVironment deeper into long-duration, AI-enabled UAS programs, which could support the broader catalyst of scaling its AV Halo ecosystem and services over time.

Yet, against this positive contract backdrop, investors should be aware that AeroVironment’s dependence on U.S. government funding still leaves the business exposed if ...

Read the full narrative on AeroVironment (it's free!)

AeroVironment's narrative projects $2.6 billion revenue and $264.5 million earnings by 2028. This requires 47.0% yearly revenue growth and about a $220.9 million earnings increase from $43.6 million today.

Uncover how AeroVironment's forecasts yield a $404.00 fair value, a 27% upside to its current price.

Exploring Other Perspectives

AVAV 1-Year Stock Price Chart
AVAV 1-Year Stock Price Chart

Seven members of the Simply Wall St Community currently see AeroVironment’s fair value between US$279.58 and US$450, highlighting a wide span of individual conviction. As you weigh those differing views, remember that the new multi year Army awards deepen AeroVironment’s exposure to U.S. budget decisions and shifting defense priorities, with clear implications for future revenue stability.

Explore 7 other fair value estimates on AeroVironment - why the stock might be worth as much as 42% more than the current price!

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.