The defense industry is undergoing a major transformation, with governments increasing spending on drones, autonomous systems, counter-UAS technologies, and precision weapons. This creates a favorable backdrop for AeroVironment (AVAV), which is positioned at the forefront of next-generation defense.
With the BlueHalo acquisition last year, AeroVironment broadened its capabilities across air, land, sea, space, and cyber, giving it exposure to multiple areas of rising defense demand. This positioning has been reinforced by several recent developments.
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AeroVironment’s momentum includes a $51 million U.S. Army order for additional Switchblade 600 systems as well as a planned $100 million investment in a new Southern California campus to expand its development and production capacity. The company’s planned joint venture in Greece further strengthens its international presence.
These developments make the company’s upcoming results particularly important. When AeroVironment reports first-quarter fiscal 2027 results on Sept. 9 after the market closes, the earnings print will help investors assess how demand, execution, and the integration of its expanded business are progressing. Management’s commentary should also provide insight into the outlook for growth and profitability, making the release worth watching.
About AeroVironment Stock
Headquartered in Arlington, Virginia, AeroVironment is a defense technology company developing robotic and autonomous systems. With a market capitalization of $7.3 billion, its portfolio includes unmanned aircraft and counter-drone systems. The company also provides precision strike weapons, artificial intelligence (AI) technologies, space communications, cybersecurity, and directed energy solutions.
That breadth has not translated into strong stock performance, however. AVAV stock is down 40% over the past 52 weeks, while shares have declined 31% over the last six months. The weakness has continued more recently as well, with the stock plunging 4% in the last month.
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From a valuation standpoint, AVAV stock currently trades at 45.6 times forward earnings and 3.8 times sales, with both multiples above the respective industry averages. Even so, these figures are below the company’s own five-year historical averages, making the current valuation more appealing to long-term investors seeking an attractive entry point.
On June 29, AeroVironment unveiled its Q4 fiscal 2026 earnings results, sending AVAV stock 19% higher in the following trading session. Revenue grew 133% year-over-year (YOY) to $641.6 million, topping the Wall Street forecast of $563.1 million.
The sharp increase was driven by higher product and service sales, with the newly acquired BlueHalo and Empirical Systems Aerospace businesses contributing $282.3 million of Q4 revenue. Autonomous Systems remained the largest contributor at $492.4 million, while Space, Cyber and Directed Energy (SCDE) generated $149.2 million in revenue.
Profitability also improved materially. Gross profit increased 102% YOY to $202.6 million, although gross margin declined to 32% from 36%, mainly because of the higher mix of service revenue and acquisition-related amortization. Operating income rose 312% to $56.9 million, while adjusted EBITDA increased 127% YOY to $140.1 million. Net income rose 278% YOY to $63.2 million, while adjusted EPS rose 14% YOY to $1.84, exceeding Wall Street’s expectations of $1.53 per share.
Looking forward, the key positive is strong demand visibility. Funded backlog stood at $1.2 billion, supported by strong bookings and a 1.4 book-to-bill ratio. Moreover, for fiscal 2027, management expects revenue of $2.125 billion to $2.225 billion, adjusted EBITDA of $305 million to $325 million, and adjusted EPS of $3.02 to $3.34.
Meanwhile, analysts expect Q1 EPS to remain unchanged at $0.32. For full-year fiscal 2027, EPS is estimated to drop 2% from the prior year to $3.25, while fiscal 2028 EPS is projected to reach $4.22, growing 30% YOY.
What Do Analysts Expect for AeroVironment Stock?
Wall Street maintains an overall “Strong Buy” rating on AVAV stock, reflecting broad optimism among analysts covering the company. Of the 22 analysts following AeroVironment, 17 have a “Strong Buy” rating, two assign a “Moderate Buy” rating, and three recommend a “Hold” rating.
Against that backdrop, the average price target of $238.40 represents potential upside of 67% from current levels. Meanwhile, the Street-high target of $330 points to a possible gain of 131% from here.
On the date of publication, Aanchal Sugandh 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. This article was originally published on Barchart.com
