Analysts Are Stepping Over Each Other to Upgrade AVAV After Their $1 Billion Contract With US Army

Look, I’m not trying to get all political here, but when Uncle Sam starts tossing around serious cash, you can bet it catches my eye. So, let me tell you about the Arlington, Virginia based company called AeroVironment that just got a big payday. The U.S. Army just handed them a contract worth nearly $1 billion, and Wall Street analysts are stepping over each other to throw out their forecasts.

The US Government has agreed to pay AV $990 million (of our tax dollars) over the next five years for their Switchblade 600 drones. When the news hit, AeroVironment’s shares jumped by 16.5%, which means the stock is now up 63% for the year.

The $990 million contract means an additional $198 million in annual revenue over the next five years. Considering AeroVironment pulled in $717 million last year, this deal is like the company just scored a 28% raise for simply showing up. It’s no wonder everyone’s losing their minds over this.

Before this news broke, AeroVironment’s stock was already priced at a steep 99 times its earnings—a number that practically screams, "This better be worth it." But now, with this nearly $1 billion contract in play, that high-flying valuation is starting to look a lot more justifiable. Investors are starting to see the dollar signs, with visions of juicier earnings in the future.

The analysts? They’re loving it. Baird didn’t waste a second, upgrading AeroVironment from “neutral” to “outperform” faster than a sports fan jumping on the latest bandwagon. And they didn’t stop there—they boosted their price target from $161 to $220, signaling they’re all-in. Alembic Global followed suit, slapping an “overweight” rating on the stock and setting a new target of $216. It’s clear they’re betting big on AeroVironment’s future.

For a bit of context, just a few months back, Palantir Technologies made headlines when their shares jumped after signing a $178.4 million contract with the U.S. Army for some cutting-edge AI tech. Fast forward to today, and their stock is up a whopping 83% year-to-date.

To be clear, I’m not saying AV’s story will play out just like Palantir’s, but one thing’s for sure: this fat contract has set them up nicely for some serious growth potential. 

Stocks.News holds positions in Best Buy, Palantir and AeroVironment.

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