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?
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.
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%.
