Laser Communications And Directed Energy Will Drive Defense Modernization

AeroVironment’s consensus price target has been raised to $305.55 due to strong positioning amid rising global defense spending, the accretive BlueHalo acquisition, robust backlog, and improved capital structure, reflecting analysts’ confidence in its long-term growth outlook.

Analyst Commentary

• AeroVironment is positioned to capitalize on heightened global defense spending, particularly due to increased demand for unmanned aerial systems (UAS), munitions, and air defense capabilities fueled by geopolitical tensions and the changing nature of warfare.
• The BlueHalo acquisition is viewed as highly accretive, expanding AeroVironment’s portfolio and driving improved growth prospects, margin expansion, and greater exposure to new defense technologies.
• Strong and increasing backlog, sustained sales momentum, and greater revenue visibility for FY26 and beyond are cited as supporting a favorable long-term growth profile, despite temporary fluctuations in unfunded backlog due to contract vehicle consolidations.
• Share gains, scaling manufacturing capacity, and successful product deployments—especially Switchblade and Puma in Ukraine—reinforce AeroVironment’s reputation as a next-generation defense prime and major beneficiary of the UAS supercycle.
• Improved capital structure following equity and convertible issuance allows for lower interest expense, offsetting share dilution, leading to higher earnings estimates and accelerating financial performance through FY26.

What's in the News

• AeroVironment provided fiscal 2026 guidance of $1.9–$2.0 billion in revenue but anticipates a net loss of $72–$77 million, reflecting recent goodwill impairments related to its UGV business and integration costs following the BlueHalo acquisition; the company also completed a major follow-on equity offering of $875 million in July 2025 (Key Developments).
• The company made significant product advancements, including the successful delivery of its mobile high-energy laser weapon systems to the U.S. Army, initial deliveries of the modular P550 sUAS for Army reconnaissance, and new milestones for its Wildcat VTOL system under DARPA’s EVADE program (Key Developments).
• AeroVironment advanced its leadership in space and communications technology with a $240 million order for long-haul laser communications terminals for satellite deployment and continued progress on the $1.4 billion BADGER ground system contract with the U.S. Space Force, supported by strategic partnerships (Key Developments).
• Strategic partnerships and alliances continue to expand, such as the collaboration with SNC on next-generation air and missile defense, technology partnership with ISS for secure vehicle communications, and an MOU with Denmark’s UAS Test Center to bolster UAS R&D and European operations; participation in high-profile marketing sponsorships is further raising the company’s public profile (Key Developments).
• U.S. policy developments supporting increased military drone investment and eased arms export restrictions—potentially including AeroVironment—may drive future growth opportunities in international and domestic defense markets, as indicated by Trump administration budget and export initiatives (Reuters, Periodicals).

Valuation Changes

Summary of Valuation Changes for AeroVironment

• The Consensus Analyst Price Target has risen slightly from $298.73 to $305.55.
• The Consensus Revenue Growth forecasts for AeroVironment has significantly fallen from 47.0% per annum to 36.8% per annum.
• The Net Profit Margin for AeroVironment has fallen slightly from 10.15% to 9.87%.