AeroVironment Is a Hot Buy With a Double-Digit Upside

Key Points

• AeroVironment's Blue Halo acquisition is driving robust growth and shareholder value gains.
• Analysts are leading this market to a new high.
• The analysts' high-end target as of mid-September is likely low; the charts indicate higher highs.

AeroVironment NASDAQ: AVAV is a hot buy in September due to its business, defense industry position, recent acquisition, and analysts' sentiment trends. The sentiment trends say it all, including a sharp increase in coverage, 100% of analysts tracked by MarketBeat rating at Buy, and the price target trend is positive.

Regarding the coverage, Aerovironment’s analyst coverage has increased by more than 100% in the preceding three months, creating a powerful tailwind for the price action, and the price targets are leading this market to record high levels. 

The price target trend is robust and unlikely to end now that the Q1 earnings release has been delivered and the guidance updated. The consensus forecasts a 25% upside, having risen by 40% over the trailing 12 months, with the high-end target set at $335.

That’s worth nearly 50% of upside from the critical support targets, which align with prior resistance and an uptrend. It is sufficient to set a new record, significant because it would confirm the Q2 price rebound and early Q3 correction as a rally and continuation signal. That would bring targets in the $375 to $425 range into play. 

Likewise, the institutional activity shows them buying on balance in 2025 and ramping their purchases into the Q1 release. This reveals solid market support with them owning more than 85% of the stock and suggests the rebound could be vigorous, as does the short-selling data. The short-interest isn’t high at just under 6% but it is elevated relative to historical norms and sufficient to assist upward price movement with short-covering. 

AeroVironment Acquisition Drives Triple-Digit Growth

AeroVironment reported a mixed quarter, but the weaknesses can be overlooked due to the strength of revenue and the completion of the Blue Halo acquisition. It added more than 100% to the ongoing, solid business.

The ongoing business grew by 16%, with strengths in both operating segments. However, Autonomous Systems, including next-gen, AI-enabled drones and other unmanned systems, have demonstrated the greatest strength and are expected to drive growth. 

The primary weakness in the report is the margin, which was impacted by significant charges related to the acquisition, many of which were non-cash in nature.

The takeaway is that GAAP and adjusted results contracted compared to the prior year, and results were weaker than expected, but adjusted profits were made, and the guidance was maintained.

The company forecasts 140% growth for the year and earnings of $3.65, or 20 cents better than the consensus forecast.

The balance sheet reveals the impacts of 2025 activities, including the acquisition of Blue Halo and a dilutive share sale, which bolstered the cash position and balance sheet health. The net result is that equity, the measure of shareholder value, increased by 5x or 400% and is expected to continue growing over time.

Regarding cash and debt, the company’s $658,000 in cash leaves it well-capitalized, while the long-term debt runs at approximately 0.25x equity and 1.2x the cash, fortress-like qualities. 

AeroVironment Confirms Trend After Its Q1 Earnings Release

AVAV’s market action was a little unsteady following the release, but the early volatility quickly dissipated, leaving the market up in early action, confirming the uptrend in the stock price.

The market for AVAV will likely continue higher in this scenario, potentially reaching the $275 level before the end of Q3. Additional upside is possible, provided the subsequent report is good.

Based on the outlook for government spending and the company’s clear momentum, there is no reason not to expect a solid result.