AeroVironment, Inc. (NASDAQ: AVAV) heads into its next earnings report after one of the most dramatic 12‑month runs in the defense-tech space: soaring on record drone demand, pulling back sharply on valuation worries, and now sitting at the center of the Pentagon’s push toward autonomous systems.
As of the close on December 5, 2025, AeroVironment stock finished at $278.39, down about 3% on the day, with a modest after-hours rebound to $279.88. [1] Even after a roughly 20–25% pullback over the past month, the shares remain up about 74% year to date and more than 200% over three and five years, according to a recent valuation analysis. [2]
Below is a deep dive into what has changed around the stock as of December 6, 2025—including fresh product and leadership news, the December 9 Q2 FY2026 earnings catalyst, and how Wall Street currently values the drone and defense-software specialist.
Where AeroVironment Stock Stands Now
- Latest close (Dec 5, 2025): $278.39
- After-hours quote: $279.88 [3]
- Recent performance:
- Roughly 2.7% decline over the last week and ~25.6% drop over the last month
- Still up ~73.7% year to date and ~64.1% over the past 12 months [4]
That pattern—big run, sharp pullback, still huge multi-year gains—is exactly what has drawn a wave of fresh analysis in the last few days:
- A December 4 Simply Wall St piece argues that, despite recent weakness, the stock still looks expensive on most valuation checks and has run far ahead of its modeled “intrinsic value.” [5]
- At the same time, a December 5 “bull case” published on Insider Monkey, summarizing a Substack thesis, makes the case that the market is still underestimating AeroVironment’s transformation after the BlueHalo acquisition and the policy tailwind from the Pentagon’s Replicator initiative. [6]
In other words: the market agrees AeroVironment is a winner. It’s arguing about how much that win is worth.
Fresh Company News: Drones, Software and Executive Bench
Over just the last week, AeroVironment has issued a flurry of announcements that matter for both strategy and investor perception.
1. New Chief Security Officer from the top of the Pentagon
On December 5, 2025, AeroVironment announced Milancy Harris as its new Vice President and Chief Security Officer (CSO). [7]
Harris brings heavyweight national-security credentials:
- Former Acting Under Secretary of Defense for Intelligence and Security
- Prior roles overseeing U.S. defense intelligence, counterterrorism, and irregular warfare policy
- Experience in the private sector helping stand up Meta’s independent Oversight Board [8]
For investors, this hire signals that AeroVironment is treating classified programs, cyber risk and compliance as strategic assets—especially important after acquiring BlueHalo, which brought a larger footprint in space, cyber and high-end electronic warfare.
2. Puma LE gains GNSS-denied navigation
On December 4, AeroVironment expanded its Puma™ Visual Navigation System (VNS) kit to the Puma LE drone. [9]
Key points from the release:
- The VNS kit fuses visual and inertial data in real time, allowing the drone to navigate precisely without GPS (GNSS-denied environments). [10]
- The upgrade is aimed at contested environments where GPS jamming and spoofing are common.
This matters because modern battlefields increasingly assume GPS is not trustworthy. Systems that can navigate visually and inertially become more valuable as electronic warfare ramps up.
3. AV_Halo CORTEX and MENTOR: doubling down on AI and training
On December 2, the company unveiled AV_Halo CORTEX and AV_Halo MENTOR, two major additions to its AV_Halo™ unified mission software platform. [11]
- CORTEX: an AI-driven intelligence fusion environment that blends open-source intelligence (OSINT), sensor data, and analytics into a single operational picture, including GPT-style “insight agents” that let analysts query data conversationally. [12]
- MENTOR: an immersive VR/AR training and mission rehearsal suite that supports systems such as Stinger and Javelin, with 360° virtual environments and after-action review tools. [13]
AeroVironment frames AV_Halo as the “connective tissue” for multi-domain missions (air, land, sea, space, cyber), aligned with the U.S. military’s Modular Open Systems Approach (MOSA) requirements. [14] For the stock story, this reinforces the shift from pure hardware to a software-and-autonomy platform with recurring, higher-margin potential.
4. Hoverfly tethered drones join AV_Halo ecosystem
On December 3, a PR Newswire release announced that Hoverfly’s tethered drones are now whitelisted on AeroVironment’s command-and-control software ecosystem, making them “natively supported and immediately deployable” via AV_Halo Command. [15]
That expands AV_Halo’s reach into tethered UAS, a key niche for persistent ISR (intelligence, surveillance and reconnaissance) around bases, infrastructure, and events.
5. A long string of contracts underneath the headlines
Beyond this week, an October–November run of press releases shows AeroVironment:
- Winning a $95.9 million U.S. Army contract for a next-generation counter‑UAS missile (FE‑1)
- Taking a leading role as software and systems integrator on U.S. Army RCCTO programs
- Signing MOUs and partnerships in Korea and Taiwan for medium UAS and air defense
- Expanding Switchblade loitering munitions, high‑energy laser systems, and P550 eVTOL UAS offerings [16]
These deals are part of what’s driving the company’s record backlog and its evolution into what some bulls call a “Defense Stack Prime”—a vertically integrated provider spanning drones, munitions, space, cyber and software. [17]
From Q3 Pain to Q4 and Q1 Momentum
To understand why the stock is controversial at today’s price, you have to look at the recent earnings path.
Q3 FY2025: a reminder that growth isn’t smooth
In early 2025, AeroVironment reported a fiscal Q3 2025 loss, with revenue down ~10% year over year to about $167.6 million and a surprise net loss of $0.06 per share versus expectations for a profit. [18]
Management blamed:
- Lower international sales, especially to Ukraine
- Operational disruptions from wildfires and power outages in Southern California
The company cut its full‑year revenue guidance to $780–795 million, below prior consensus, and the stock dropped around 13% on the news. [19] That quarter is still a useful reminder: this is a defense contractor heavily exposed to program timing and geopolitics.
Q4 FY2025: record revenue, profit and backlog
The tone flipped dramatically in Q4 FY2025:
- Quarterly revenue: about $275.1 million, up 40% year over year
- Adjusted EPS:$1.61, versus $0.43 a year earlier and ahead of the ~$1.39 consensus
- Full‑year FY2025 sales: about $820.6 million, up 14% from FY2024
- Funded backlog: around $726.6 million, nearly double the prior year [20]
Shares jumped more than 20% in a single session after the June 24–25 earnings release, with Reuters and Barron’s both highlighting the boom in drone demand and the sharply improved bookings trend. [21]
Management described FY2025 as a “remarkable” finish with record revenue, significantly higher profits, and a backlog “nearly double” FY2024 levels. [22]
Q1 FY2026: the BlueHalo era begins
The first quarter of FY2026 (reported September 9) was the first full period to include the BlueHalo acquisition, and it completely changed the scale of the P&L: [23]
- Q1 FY2026 revenue:$454.7 million, up 140% year over year
- BlueHalo contributed roughly $235 million
- Organic revenue still grew about 16%
- Adjusted EPS:$0.32, a penny below consensus, but
- Adjusted EBITDA:$56.6 million, ahead of ~$50 million expectations
- Funded backlog: surged to around $1.1 billion, up from $727 million the prior quarter
GAAP net income turned into a loss, driven largely by acquisition-related amortization and purchase accounting charges, but underlying cash-generating capacity and backlog both strengthened. [24]
For FY2026, management guided to: [25]
- Revenue:$1.9–2.0 billion
- Adjusted EPS:$3.60–3.70
- Adjusted EBITDA:$300–320 million
Those numbers mean AeroVironment is trying to more than double revenue year over year while digesting a very large acquisition—great for growth, but execution-sensitive.
December 9 Q2 FY2026 Earnings: What Wall Street Expects
The next catalyst is imminent. AeroVironment will report Q2 FY2026 results for the quarter ended November 1, 2025, after the market closes on December 9, 2025, with a conference call at 4:30 p.m. Eastern. [26]
Consensus estimates
A detailed preview from Zacks (via Finviz) lays out Street expectations: [27]
- EPS:$0.85
- Up about 80.9% year over year
- Revenue:$477.43 million
- Up ~153.3% year over year
Analysts are also modeling:
- Contract services revenue: roughly $152 million (+~309% YoY)
- Product sales revenue: about $309 million (+~104% YoY)
- Higher gross margin dollars for both segments compared with the prior year [28]
Over the past 30 days, consensus EPS for the quarter has been trimmed by about 1.6%, suggesting slightly cooler near-term expectations. [29] Another Zacks note earlier in the week argued that AeroVironment lacks some of the statistical factors it looks for in likely earnings “beats,” advising caution around the magnitude of any surprise. [30]
Short‑term sentiment from Zacks
Zacks’ messaging on AVAV has been somewhat mixed over the last few days:
- A December 3 article highlighted an upgrade to a “Buy” bucket, tied to steadily rising earnings estimates and a Zacks Rank #2 designation. [31]
- The December 4 earnings preview, however, described the stock as carrying a more neutral Rank #3 (Hold) while still expecting strong growth in Q2. [32]
- A separate Zacks ideas piece on December 4 put AeroVironment on a list of three drone technology stocks to own for 2026, noting that revenue for the year ending April 2026 is expected to grow by more than 100%, with EPS up about 10.4% and a Zacks Rank #2 at the time of publication. [33]
Net takeaway: Zacks’ factor models see strong earnings momentum and revenue growth, but the very strong share-price run and recent pullback make near-term performance less straightforward.
Analyst Ratings and Price Targets: Bullish, but with Divergent Valuations
Street consensus: broadly positive
Data compiled by MarketBeat and StockAnalysis shows a heavily bullish analyst community:
- MarketBeat:
- 23 analysts covering the stock
- Overall consensus rating: “Buy”
- Average price target:$358.19
- Range:$300 (low) to $430 (high)
- Implied upside: roughly 29% from the recent ~$278 price [34]
- StockAnalysis.com:
- 14 analysts
- Consensus: “Strong Buy”
- Average target:$352.21 (about 26.5% above $278.39)
- Target range:$275–$430 [35]
A separate forecast aggregation at TickerNerd (drawing on 18 Wall Street analysts) shows: [36]
- Median 12‑month price target:$405.99
- Range:$335–$486
- Implied upside: roughly 41% from a recent reference price of $287.45
While the exact numbers differ, the pattern is consistent: the Street expects double‑digit to high‑double‑digit percentage upside from current levels.
Fundamental forecasts
According to StockAnalysis’ forward estimates: [37]
- Revenue this year (FY2026): about $2.04 billion, up ~148% from roughly $821 million in FY2025
- Revenue next year (FY2027): projected around $2.39 billion, another ~17% growth
- EPS this year: about $3.73, more than 140% above the prior year
- EPS next year: forecast around $4.62, implying roughly 24% further growth
With the stock around $278, that works out to roughly 75× this year’s expected EPS, a high multiple even for a fast-growing defense name.
Valuation: Overpriced, Fair, or Underappreciated?
Recent analyses disagree sharply on what that 70+ P/E and high sales multiple actually mean.
The “too expensive” camp
The December 4 Simply Wall St piece argues that: [38]
- A discounted cash flow (DCF) model yields a fair value around $182 per share, implying the stock is roughly 50% overvalued versus current levels.
- AeroVironment’s price‑to‑sales ratio of ~12.4× is well above the aerospace & defense industry average (~3.0×) and its peer group (~5.8×).
- By their methodology, the company passes only 1 of 6 valuation checks, earning a weak value score.
This school of thought sees a great company, but a stretched stock, especially after its huge multi‑year run.
The “high‑growth re‑rating” camp
At the other pole, a December 5 Insider Monkey article summarizing a bullish thesis from Uncle Stock Notes makes a very different argument: [39]
- Post‑BlueHalo, AeroVironment is framed as a next‑generation “Defense Stack Prime”, selling a full stack of hardware, software, autonomy and cyber capabilities.
- The thesis cites FY2026 guidance of $1.9–2.0 billion in revenue and $300–320 million in EBITDA, along with a ~$1.1 billion backlog, as evidence of a durable growth runway. [40]
- It compares AeroVironment’s sales multiple (around 7–12×, depending on the metric and period used) to private peers like Anduril and Shield AI, which are reportedly valued at 20–30× sales, arguing AVAV trades at a discount to similar high‑growth defense-tech platforms. [41]
- On that basis, the author suggests a 12–18 month target of roughly $380–$390 per share, anchored on a forward EPS estimate of about $6 by FY2028 and a high‑growth P/E of 60–65×. [42]
In this view, today’s valuation is rich but justified, with further upside if AeroVironment executes on its policy-driven growth cycle and closes the perceived gap with private “defense unicorns.”
A middle-ground perspective
A September 2025 bull case from another source summarized by Insider Monkey presented AeroVironment as a high‑beta, speculative growth stock: [43]
- FY2025 revenue around $821 million and Q1 FY2026 revenue of $455 million
- A heavy reliance on the U.S. Department of Defense (about 90% of business)
- Elevated multiples, with EV/Sales ~11–12× and EV/EBITDA above 100× at the time
That framework basically says: big upside, big risk, and a lot depends on whether the company can keep converting backlog into profitable, cash‑rich growth.
How Recent Macro and Policy Trends Feed the Story
The latest bull thesis leans heavily on policy tailwinds:
- The Pentagon’s Replicator program and a July 2025 defense memorandum emphasize shifting from a handful of exquisite platforms to large numbers of attritable, autonomous systems—exactly the niche AeroVironment occupies. [44]
- The FY2025 U.S. defense budget reportedly allocates around $10.1 billion to unmanned vehicles and more than $1.7 billion to counter‑UAS programs, both areas where BlueHalo and AeroVironment now have deep offerings. [45]
Layer onto that:
- Ongoing conflicts and tensions that keep drones, loitering munitions and C‑UAS at the top of procurement wish lists
- Increasing emphasis on software, AI, training and interoperability (AV_Halo, CORTEX, MENTOR, and Hoverfly integration all push in this direction) [46]
Those dynamics help explain why Wall Street is willing to pay growth‑stock multiples for what used to be a relatively small defense hardware vendor.
Key Risks Investors Are Watching
Despite the powerful narrative, analysts and commentators highlight several risks:
- Customer concentration
Roughly 90% of business tied to the U.S. Department of Defense makes AeroVironment highly sensitive to program-level decisions, delays, and budget cycles. [47] - Execution and integration risk
Managing a rapid scale-up to $2 billion+ in revenue while digesting the multi‑billion‑dollar BlueHalo acquisition is complex. Missteps could hit margins, cash flow or program performance. [48] - Valuation and volatility
- Program and geopolitical risk
The Q3 FY2025 stumble—driven in part by a drop in Ukraine-related sales—is a reminder that hot-theater revenue can cool suddenly as conflicts evolve or funding shifts. [51] - Balance sheet and financing
AeroVironment issued 0% convertible senior notes due 2030 and an upsized equity offering in mid‑2025, partly to fund its growth strategy and acquisitions. [52]
While that provides capital, it can introduce dilution and future conversion overhang.
What to Watch on December 9 and Beyond
For investors following AVAV into the Q2 FY2026 earnings release, key items to watch include:
- Organic vs. acquisition-driven growth
How much of the expected ~153% revenue growth is organic, and how sustainable is that trend without BlueHalo’s initial step-change? [53] - Margins and cash flow
- Are adjusted EBITDA and gross margins tracking toward the $300–320 million full‑year EBITDA guidance? [54]
- How quickly are acquisition-related charges rolling off?
- Backlog quality and new awards
Does the backlog continue to grow from the $1.1 billion reported in Q1, and is it diversified across programs, services and geographies? [55] - Software & AI traction
Early commentary on AV_Halo CORTEX and MENTOR, Puma VNS expansion, and the Hoverfly integration will be important in gauging whether AeroVironment can build a recurring, software-heavy revenue mix over time. [56] - Guidance updates
Any tweak to the $1.9–2.0 billion revenue and $3.60–3.70 EPS FY2026 outlook could move the stock significantly, given how much of the valuation rests on multi‑year growth assumptions. [57]
Bottom Line
As of December 6, 2025, AeroVironment is:
- A core beneficiary of the global shift toward autonomous, attritable defense systems, now reinforced by a major acquisition in BlueHalo and a rapidly expanding software stack. [58]
- A stock with strong Street support and aggressive growth forecasts, but also valuation metrics that leave little room for big execution mistakes. [59]
The bullish case says AVAV is evolving into a next‑generation defense prime and still trades at a discount to private peers; the cautious view says much of that future is already priced in, with DCF and peer‑based models screaming “overvalued.”
Which story proves closer to reality will depend heavily on what AeroVironment shows the market on December 9 and how convincingly it can sustain high growth, expand margins and turn its billion‑dollar backlog into recurring, defensible cash flow.
References
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