AeroVironment
AVAV
$186.73
+9.12%
AeroVironment, Inc. is a defense technology provider delivering integrated capabilities across air, land, sea, space, and cyber, specializing in autonomous systems, precision strike, counter-UAS, and directed energy. As a leader in unmanned systems, it holds a distinct competitive position in the rapidly growing drone and counter-drone market, serving primarily U.S. government and allied defense customers. The current investor narrative centers on a record revenue quarter and a surging backlog, which have fueled optimism about a multiyear upcycle in drone procurement, yet the stock has experienced significant volatility and a sharp drawdown from its 52-week high, prompting debate about valuation and execution risks.…
AVAV
AeroVironment
$186.73
Related headlines
Investment Opinion: Should I buy AVAV Today?
Rating & Thesis: We rate AeroVironment as a Hold. The company has exceptional growth prospects, but the lack of profitability and high valuation create significant risk. The analyst consensus is 'Buy' with an average target of $225.77, implying 31.9% upside, but the wide target range and recent downgrades suggest caution. The core thesis is that the company's leadership in drones and counter-drone systems positions it for long-term growth, but near-term profitability challenges and stock volatility warrant a wait-and-see approach.
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AVAV 12-Month Price Forecast
The AI assessment is neutral with medium confidence. AeroVironment has exceptional growth but faces significant profitability and valuation challenges. The stock's severe underperformance suggests negative sentiment, but the large backlog and strategic positioning provide a floor. The key factor is whether the company can achieve profitability. If it does, the stock could re-rate significantly; if not, further downside is likely. We would upgrade to bullish if the company reports positive net income and free cash flow, and downgrade to bearish if revenue growth decelerates below 20% or margins deteriorate.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on AeroVironment's 12-month outlook, with a consensus price target around $225.77 and implied upside of +20.9% versus the current price.
Average Target
$225.77
0 analysts
Implied Upside
+20.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$149 - $326
Analyst target range
Analyst coverage is robust with 19 analysts, and the consensus recommendation is 'Buy' with a mean rating of 1.6 (where 1 is Strong Buy). The average target price is $225.77, implying an upside of approximately 31.9% from the current price of $171.12. The target range spans from a low of $148.57 to a high of $326.00, indicating a wide dispersion in expectations. Recent ratings actions have been predominantly positive, with firms like Canaccord Genuity and BTIG reiterating Buy ratings in July 2026, while RBC Capital downgraded from Outperform to Sector Perform, reflecting some caution. The wide range suggests high uncertainty about the pace of margin recovery and the sustainability of revenue growth.
Bulls vs Bears: AVAV Investment Factors
AeroVironment presents a classic high-growth, high-risk investment. The bull case is anchored on exceptional revenue growth (133% YoY), a massive $2.7B backlog, and a strategic position in defense technology. However, the bear case highlights persistent losses, negative cash flow, and a stock that has severely underperformed. Currently, the bearish evidence is stronger given the lack of profitability and the stock's downtrend. The most important tension is whether the company can convert its record revenue growth into sustainable profitability. If margins continue to improve and the company reaches profitability, the stock could re-rate significantly. Conversely, if growth decelerates or margins fail to expand, the high valuation and negative cash flow could lead to further downside.
Bullish
- Record Revenue Growth: Q4 FY2026 revenue surged 133.27% YoY to $641.6M, driven by strong demand for autonomous systems and counter-drone technologies. This growth rate far exceeds the broader defense sector and underscores the company's strategic positioning in high-priority defense areas.
- Massive Backlog Supports Future: The company reported a $2.7B backlog, which provides multi-year revenue visibility. This backlog, combined with a recent $500M Army contract for counter-drone systems, indicates sustained demand and reduces near-term revenue uncertainty.
- Gross Margin Recovery: Gross margin improved to 39.58% in Q4 from 17.06% in Q3, reflecting better cost management and product mix. This sharp improvement suggests the company is gaining operational leverage as revenue scales.
- Analyst Consensus Buy: With 19 analysts, the consensus rating is 'Buy' with a mean score of 1.6 (Strong Buy). The average price target of $225.77 implies ~31.9% upside from the current price of $171.12, indicating that sell-side analysts see significant value.
Bearish
- Persistent Unprofitability: Despite record revenue, the company reported a net loss of -$24.1M in Q4 and a net margin of -3.76%. Over the trailing twelve months, the net margin is -13.41%, indicating that revenue growth is not translating to bottom-line profitability.
- Severe Stock Underperformance: The stock has fallen 34.96% over the past year and 33.47% over six months, dramatically underperforming the S&P 500 (relative strength -56.42% over 1 year). This trend reflects a loss of investor confidence and could indicate further downside.
- High Valuation on Forward Earnings: The forward PE of 38.85x is elevated, implying the market expects a significant earnings recovery. If the company fails to meet these expectations, the stock could face multiple compression and further declines.
- Negative Free Cash Flow: Free cash flow over the trailing twelve months is -$123.1M, indicating the company is burning cash. This could limit financial flexibility and increase reliance on debt or equity financing, especially if growth slows.
AVAV Technical Analysis
AeroVironment's stock is in a pronounced downtrend, with a 1-year price change of -34.96% and a 6-month decline of -33.47%. The current price of $171.12 sits at approximately 41% of its 52-week range (low $135.20, high $417.86), indicating it is trading near the lower end of its range, which often suggests either a value opportunity or a falling knife. The stock has underperformed the S&P 500 dramatically, with relative strength of -56.42% over the past year, reflecting a severe loss of investor confidence.
Beta
1.41
1.41x market volatility
Max Drawdown
-66.7%
Largest decline past year
52-Week Range
$135-$418
Price range past year
Annual Return
-28.1%
Cumulative gain past year
| Period | AVAV Return | S&P 500 |
|---|---|---|
| 1m | +18.3% | +2.4% |
| 3m | +11.0% | +4.6% |
| 6m | -27.4% | +11.7% |
| 1y | -28.1% | +21.4% |
| ytd | -27.1% | +13.4% |
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AVAV Fundamental Analysis
Revenue growth has been robust, with the most recent quarter (Q4 FY2026) reporting revenue of $641.6 million, a 133.27% year-over-year increase, driven by strong demand for autonomous systems and counter-drone technologies. However, this growth is not translating to profitability, as the company reported a net loss of -$24.1 million in Q4, with a net margin of -3.76%. Gross margin improved to 39.58% in Q4, up from 17.06% in Q3, indicating better cost management, but operating margin remains deeply negative at -31.00% due to heavy investments and acquisition-related costs.
Quarterly Revenue
$641616000.0B
2026-04
Revenue YoY Growth
+133.3%
YoY Comparison
Gross Margin
39.6%
Latest Quarter
Free Cash Flow
$-123069000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is AVAV Overvalued?
Given the negative trailing net income, the price-to-sales (PS) ratio is the most appropriate valuation metric, currently at 4.84x trailing, which is elevated compared to the broader industrials sector. The forward PE of 38.85x implies the market expects a significant earnings recovery, as analysts project EPS of $7.40 for the next fiscal year. Compared to the company's own historical PS range, which has fluctuated between 13.9x and 38.9x over the past three years, the current 4.84x is near the lower end, suggesting the stock may be undervalued relative to its own history, but this could reflect deteriorating fundamentals.
PE
-36.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 28x~223x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-32.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: AeroVironment's primary financial risk is its persistent unprofitability. Despite record revenue, the company reported a net loss of -$24.1M in Q4 and a net margin of -3.76%. Over the trailing twelve months, the net margin is -13.41%, and free cash flow is -$123.1M, indicating cash burn. The company's debt-to-equity ratio is low at 0.19, but the negative cash flow could force it to raise capital, diluting shareholders. Additionally, the operating margin is deeply negative at -31.00% in Q4, reflecting heavy investments and acquisition-related costs. Revenue concentration is also a risk, as the majority of revenue comes from U.S. government contracts, making the company vulnerable to budget cuts or policy shifts.