Al Root
Shares of drone technology company AeroVironment rose early Monday for two good reasons.
For starters, the company was awarded some new business. Friday, the U.S. Army awarded AeroVironment a $117 million contract for its P550 Group two aircraft, a reconnaissance drone. The company was also awarded a smaller contract for its Red Dragon attack drone.
"These [contracts] are significant as the Army is expected to spend over $1 billion for long-range reconnaissance systems over the next 10 years...This initial Red Dragon contract may lead to a much larger contract," wrote William Blair analyst Louie DiPalma in a recent report. "We also expect AeroVironment to win a contract for its LOCUST [anti-drone] laser system over the next couple of months."
He rates AeroVironment shares Buy and doesn't have a price target for the stock.
AeroVironment stock was up 2.1% in early trading at $201.84, while the S&P 500 and Dow Jones Industrial Average were up 1.9% and 2%, respectively. Stocks rose after President Donald Trump announced that the U.S. and Iran had held talks to end hostilities.
Shares of the drone maker also benefited from an upgrade. Raymond James analyst Brian Gesuale upgraded the stock to Hold from Sell, citing recent stock price declines. He doesn't have a price target for shares.
Coming into Monday trading, AeroVironment stock was down almost 25% over the past three months, hurt after the Defense Department reopened an antenna supply contract originally won by AeroVironment subsidiary BlueHalo.
"We believe the multiple compression, negative estimate revisions, and significant stock underperformance balances the risk/reward dynamics at current levels," wrote Gesuale on Monday.
AeroVironment stock now trades for about 50 times earnings expected over the coming 12 months, down from almost 100 times about six months ago.
Gesuale, for his part, would like to see more backlog growth before becoming more positive on shares.
Overall, AeroVironment remains a popular stock on Wall Street, with 84% of analysts covering the company rating its shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 typically ranges from 55% to 60%. The average analyst price target for AeroVironment stock is about $312.
Write to Al Root at allen.root@dowjones.com
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March 23, 2026 10:27 ET (14:27 GMT)
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