AeroVironment Will Hit New Highs This Year: Bull Flag Confirmed

Key Points

• AeroVironment is a well-positioned next-gen defense contractor whose products are in high demand.
• The company is accelerating growth at a hyper pace and profits, too.
• Analysts are lifting their targets, leading the market to new highs. 

AeroVironment’s NASDAQ: AVAV stock price is expected to reach a new high this year, as the Q4 results and guidance have affirmed bullish analysts' expectations, resulting in a bullish technical signal with significant upside implications. The signal is a Bullish Flag Pattern, a continuation signal indicating that the $50 price rally preceding it is likely the first half of a larger movement.

The post-release gain, exceeding 20%, confirms the pattern and suggests that the stock price will move above the $240 level by the end of the summer, aligning with the high end of the analysts’ range, and will likely continue to move higher from there. 

The analysts' sentiment trends are critical to this stock’s price movement. The trends leading up to the release included upgrades and price target increases that were sustained in its aftermath. The chatter ahead of the release includes an optimistic report from Stifel outlining AeroVironment’s position in next-gen defense technology, automation, and asymmetric weapons systems.

The chatter following it includes numerous price target revisions, leading the market to the high-end range near $245. That's critical because moving to new highs will also take this market out of its range and bring a much more robust target into play, possibly resulting in another $100 price increase this year.

AeroVironment, A Leader in Low-Cost, Automated Weapons Systems

AeroVironment reported a solid Q4, with revenue growth surging to nearly 40% year-over-year (YOY) on strength across all segments. The company’s Loitering Munitions Systems (drones with bombs) grew by 87% followed by a 24% increase in MacReady Works (advanced autonomous systems and defense AI), and an 8% gain in Uncrewed Systems. 

The margin news is also good. The company’s gross margin contracted, but less than expected, and was offset by increased operating leverage and operational quality. The net result is that income from operations, net income, adjusted EBITDA, and adjusted EPS all more than doubled, with adjusted EBITDA and EPS growing more than 3x and 4x, respectively. 

The guidance is what has the market amped. The guidance called for robust growth to continue in FY2026, aided by the acquisition of BlueHalo, which was well above the consensus forecasts. BlueHalo is a defense contractor focusing on advanced and automated space-based systems. The company expects revenue to grow by more than 135% and may exceed the forecasts. 

The company’s bookings grew to record levels in FY2025, topping $1.2 billion, and are likely to continue accelerating. The U.S. is amid a structural defense transformation, bolstered by heightened geopolitical tensions, that leans heavily on automated systems. The Golden Dome project alone promises to spend heavily on space-based and unmanned aerial intercept vehicles. 

Sell-Side Trends Amplify Upside Potential for AVAV Stock Price

The sell-side trends, including institutional activity and short interest, align with a robust price increase for this stock. The institutions provide a strong support base owning more than 85% of the stock, and they are buying on balance in 2025, ramping their activity to a record high in Q1 and remaining strongly bullish in Q2. Regarding the short interest, it also ramped to a record high in 2025 and was high at nearly 15% ahead of the report; short-covering is a factor in this stock’s price rise. 

The risk for the market is that short-sellers will reposition at a higher level, possibly near the $240/$245 level, and cap gains in this stock. The stock price could pull back in that scenario, but would present a buying opportunity if realized. This company is not only growing at a hyper pace, but it is also profitable and building value for shareholders. The primary example is equity, which increased by 7.75% in F2025. 

Debt and net debt are also very low, leaving the company in a financially flexible position that allows it to make acquisitions as targets present themselves.