AeroVironment’s NASDAQ: ABAV The price decline in December is a buying opportunity due to the company’s position as a next generation defense contractor, strong results, growth, forecasts, analyst trends and institutions buying this stock like crazy. Institutional activity is notable in that the group owns more than 85% of the shares, made balance sheet purchases quarterly in 2024, and has a steadily growing balance of activity. The balance of activity in the first two months of the fourth quarter of the calendar is at a multi-year high, with another month remaining, providing a strong tailwind for the market. It’s unlikely that these trends will end, and it’s more likely that this stock will quickly regain momentum, resume its uptrend, and make new highs.
AeroVironment today
(As of 6:15 p.m. ET)
- 52 week range
- $116.51
▼
$236.60
- P/E ratio
- 76.68
- Target price
- $211.83
What does AeroVironment do? It produces drones and, more importantly, artificial intelligence-enhanced loitering munition systems that give Western powers an air advantage. The LMS uses powerful electrical systems to remain on station for hours at a time while flying over targets, using computer vision and other artificial intelligence enhancements to observe and search for possible targets. Drones either deliver a payload or are the payload themselves. AeroVironment’s business drivers today include growing demand for next-generation systems, including the AVAV AI retrofit kit for older models, as well as global remilitarization. Military spending reached a new high in 2024 and is expected to rise in the 2025 calendar year.
AeroVironment retreats after mixed quarter, light guidance
AeroVironment had a strong quarter in fiscal Q2 2025/Q3 2024, with revenue up 4.2% to a quarterly record. Revenue was nearly 400 basis points ahead of MarketBeat’s stated consensus on the strength of the LMS and MacCready Works systems. LMS sales grew 157%, and MacCready Works, which produces the most advanced unmanned systems, grew 42.%, offset by a 35% decline in sales of legacy unmanned systems.
AeroVironment stock forecast today
$211.83
Growth potential 29.70%Buy
Based on 8 analyst ratings
| High forecast | $245.00 |
|---|---|
| Average forecast | $211.83 |
| Low forecast | $145.00 |
AeroVironment stock forecast details
The margin news is one of the factors that weighed on the market following the release. The company reported a decline in gross profit, compounded by an increase in selling and administrative expenses. The caveat is that gross margins are shrinking due to the transition from legacy products to LMS, while R&D and SG&A acquisition costs are increasing. Increasing SG&A is a concern, but R&D will lead to technological advances and future sales, and acquisition costs will disappear over time, leading to future sales.
The leadership is ambiguous. The company confirmed its forecasts, but failed to meet analyst consensus. The recommendations may be cautious due to a 25% increase in the funding gap, but it will be several months before this can be confirmed. Investors should focus on the fact that the company is growing and is supported by tailwinds that will support the business until the end of next year.
The sales side supports AeroVironment: don’t expect the discount to last long
Sales trends, including analyst sentiment and institutional ownership, are bullish in 2024. Analyst trends include increased coverage, improved sentiment to Buy from Moderate Buy, and an increase in the consensus price target. The first changes since the release of Q2 2025 data confirm this trend and suggest a possible move into the upper analyst target range. Consensus calls for nearly 25% upside from the critical support target, while the upper range adds another 20%.
Technical action is unclear: the market is down more than 10% and the sell-off that began in November continues. However, this market is volatile and rising within an ascending channel and is likely to continue to do so this year due to selling support. The critical support target is near the $170 level and may be tested more than once. A fall below this level will break the trend and result in a trading range, if not a larger decline. Confirmation of support will lead to a late-year rally and a transition to the upper boundary of the channel in early 2025.
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