AeroVironment (AVAV) Valuation in Focus After Space Laser Deal, Army Delivery, and New AV_Halo Platform Launch

If you have been watching AeroVironment (AVAV) lately, you know this stock has hardly been quiet. In just the past week, the company announced a $240 million space laser communications order, delivered mobile laser weapon prototypes to the U.S. Army, and unveiled a hardware-agnostic defense software ecosystem called AV_Halo. Layer in the just-released quarterly earnings and new forward guidance, which include strong revenue but ongoing net losses, and you have a lot for investors to process.

These announcements have come on the heels of a year that has seen AeroVironment’s momentum build, with a share price up 28% over the past twelve months and a remarkable 48% year-to-date. Even short-term gains have been significant, although the company has seen some volatility over the past month. This run of product launches, contract wins, and persistent innovation is clearly contributing to the growing sense of opportunity, even as recent earnings numbers remind investors of the balancing act between growth and profitability.

After this streak of big news and a strong rally this year, the big question is whether AeroVironment is offering a purchase opportunity at current levels or if the market has already factored in as much future growth as it can handle.

Most Popular Narrative: 19.5% Undervalued

The most widely followed narrative currently suggests AeroVironment is undervalued by nearly 20% relative to fair value. This view highlights strong anticipated growth, transformative acquisitions, and robust industry trends as major catalysts.

The surge in international defense spending, especially among NATO and allied countries, is driving record orders for AeroVironment's advanced unmanned systems (such as Switchblade, Puma, JUMP 20). As global conflicts underscore the urgency for rapid UAS deployment, this is building a robust multi-year pipeline and supporting double-digit forward revenue growth. Accelerating adoption of autonomous, AI-enabled, and software-defined aerial and ground platforms (such as Red Dragon, P550, and MacCready Works technologies) is expanding AeroVironment's addressable market beyond traditional military use into multi-domain operations and adjacent sectors, providing a catalyst for diversification and sustained margin expansion.

Curious why analysts are betting on almost unheard-of growth rates and ambitious profit forecasts? The fair value calculation behind this narrative is built on bold projections and an aggressive future earnings multiple that tells a different story than the broader market. Think you know what’s driving this high price target? Wait until you see which assumptions underpin the valuation.

Result: Fair Value of $286.94 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unexpected delays in U.S. defense budgets or difficulties integrating acquisitions such as BlueHalo could quickly challenge the bullish outlook and test investor conviction.

Find out about the key risks to this AeroVironment narrative.

Another View: Market Price Says Otherwise

While analysts point to strong growth and fair value, taking a closer look at how the market prices AeroVironment reveals a sharply different view. By comparing its sales multiple to industry norms, the narrative flips. AeroVironment trades at a premium. Which valuation lens tells the more accurate story?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding AeroVironment to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own AeroVironment Narrative

If you want to see the numbers through your own lens or believe a different story is unfolding, exploring the underlying data and building a narrative takes just a few minutes, so why not give it a try? Do it your way.

A great starting point for your AeroVironment research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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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.

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