On Aug. 19, Needham analyst Austin Bohlig initiated coverage on AeroVironment (AVAV), assigning a “Buy” rating and framing the drone sector as entering a “generational investment cycle” driven by the modern battlefield’s heavy reliance on autonomous systems. When it comes to AeroVironment, Bohlig believes the company is “entering a multi-year supercycle,” benefiting from shifting defense priorities toward unmanned platforms and reinforced by the transformative BlueHalo acquisition that positions AeroVironment as a “next-generation defense prime.”

The analyst estimates that the company’s total addressable market (TAM) has ballooned nearly fivefold to $50 billion, and he anticipates further upside via multiple expansion as AeroVironment deepens its defense market share and improves margins. As AVAV stock garners heightened interest, should you consider investing in shares now?

About AeroVironment Stock

Headquartered in Arlington, Virginia, AeroVironment is a U.S. defense technology company specializing in the design and manufacture of unmanned aerial systems (UAS). Its market capitalization stands at around $11.6 billion, reflecting the firm's significant position in the aerospace and defense sector.

AeroVironment has experienced notable volatility but also periods of strong momentum in recent months. A standout moment came in late June, when AVAV stock surged almost 22% on June 25 after the company reported stellar fourth-quarter fiscal 2025 results.

However, over the past month, AVAV stock has declined 15% amid sector hesitation. That's despite a defense procurement policy shift from the Pentagon having sparked some optimism, briefly boosting shares earlier this year.

Still, AeroVironment's year-to-date (YTD) gains remain significant, up 51% on defense tailwinds and heightened demand for unmanned aerial systems.

AVAV stock currently trades at a premium compared to the sector median as well as its own historical average at 72.7 times forward earnings.

AeroVironment's Steady Financial Performance

On June 24, AeroVironment unveiled its fourth-quarter and fiscal 2025 results, posting record Q4 revenue of $275.1 million, a striking 40% year-over-year (YOY) increase driven by robust growth across its core segments. Loitering Munitions Systems (LMS) revenue surged 87%, MacCready Works rose 24%, and Uncrewed Systems (UxS) climbed 9%.

Profitability also impressed, as adjusted EBITDA reached $61.6 million and adjusted EPS came in at $1.61, far surpassing Q4 2024 and blowing past estimates. The company reported net income of $16.7 million, up from $6 million a year earlier, although Q4 included a non-cash UGV goodwill impairment of $18.4 million.

For the full fiscal year, AeroVironment logged record revenue of approximately $820.6 million, marking around 14% annual growth, and achieved its highest-ever bookings of $1.2 billion. The company’s funded backlog soared to $726.6 million, an almost 82% increase YOY, providing strong revenue visibility.

For fiscal 2026, management offered strong forward guidance, projecting revenue between $1.9 billion and $2.0 billion, adjusted EBITDA between $300 million to 320 million, and non-GAAP EPS of $2.80 to $3.

Analysts predict EPS to be around $3.23 for fiscal 2026, down 1.5% YOY, before surging by 40.9% annually to $4.55 in fiscal 2027.

What Do Analysts Expect for AeroVironment Stock?

In recent weeks, AeroVironment has seen a wave of positive analyst activity. Recently, Needham initiated coverage with a “Buy” rating and $300 price target, highlighting the company’s leadership role in defense tech and its evolution into a next-generation prime contractor following the BlueHalo acquisition.

Earlier this month, Canaccord Genuity reitererated a “Buy” call on AVAV stock with a $305 price target. The firm’s continued confidence is driven by growing global demand for drones and unmanned systems in both military and civilian sectors.

Finally, JMP Securities initiated coverage on Aug. 4 with a “Market Outperform” rating and a price target of $325.

Wall Street is majorly bullish on AVAV stock. Overall, shares have a consensus “Strong Buy” rating. Of the 13 analysts covering the stock, 10 advise a “Strong Buy,” two suggest a “Moderate Buy,” and one gives a “Strong Sell" rating.

The average analyst price target for AVAV is $297.33, indicating potential upside of 27%. The Street-high target price of $335 suggests that the stock could rally as much as 43% from here.