TLDR
- Raymond James upgraded AVAV from Market Perform to Outperform with a $210 price target
- AVAV stock rose 2% Thursday after falling 55% since March, closing Wednesday at $141.22
- The U.S. Army is negotiating the Enduring High Energy Laser (E-HEL) program with AeroVironment, a ~$500M opportunity
- Funded backlog could rise nearly 20% quarter over quarter, improving revenue visibility into fiscal 2027
- Wall Street consensus remains Strong Buy: 15 Buy, 2 Hold, average price target $225.50 — implying ~60% upside
AeroVironment (AVAV) stock climbed 2% on Thursday after Raymond James upgraded the stock and set a $210 price target. That follows a brutal 55% slide since March that left the stock closing Wednesday at $141.22.
Five-star analyst Brian Gesuale made the call, upgrading AVAV from Market Perform to Outperform. His view: the selloff has gone far enough and the risk/reward has flipped.
“With bookings beginning to inflect, backlog positioned to resume growth, and consensus expectations now significantly de-risked, we believe the risk/reward has turned decisively positive,” Gesuale wrote.
Forward EBITDA estimates have been cut roughly 15% over the past six months. Gesuale argues that move alone has done a lot of the heavy lifting in resetting expectations.
Concerns around the SCAR program — which weighed on production revenue and EBITDA margin expansion — are now largely in the rearview mirror, according to the note.
New Contracts Could Rebuild the Backlog
The U.S. Army disclosed this week it is in negotiations with AeroVironment over the Enduring High Energy Laser (E-HEL) program. Raymond James estimates that contract could be worth roughly $500 million.
On top of that, AeroVironment recently secured the Domestic Shield IDIQ contract vehicle, which Gesuale also values at a similar magnitude. Both deals reinforce AeroVironment’s position in the counter-UAS and Directed Energy space alongside BlueHalo.
Gesuale expects the funded backlog to post its first sequential increase in over a year, potentially jumping close to 20% quarter over quarter. That would give the company much clearer revenue visibility heading into fiscal 2027 and 2028.
Raymond James’ own EBITDA estimates for those years sit about 10% above Wall Street consensus, leaving room for broader analyst upgrades as new awards convert to revenue.
Newer platforms including the P550 and Red Dragon are also gaining traction, and international demand is picking up, adding more legs to the recovery thesis.
Other Analysts Stay Bullish Despite Target Cuts
Not everyone is raising targets. Bank of America’s Ronald Epstein cut his price target to $225 from $450. Canaccord Genuity’s Austin Moeller trimmed to $240 from $280. Citizens JMP’s Trevor Walsh moved to $230 from $350.
The reductions reflect a more cautious view on the pace of growth, but none of the analysts dropped their Buy ratings. The consensus across Wall Street remains a Strong Buy, backed by 15 Buy ratings and just 2 Holds.
The average AVAV price target sits at $225.50, which implies nearly 60% upside from Wednesday’s close of $141.22.
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