AeroVironment Stock Falls As The Drone Rally Fades But I Still See Big Upside
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Dhierin BechaiInvesting Group LeaderFollow5ShareSavePlay(9min)CommentsSummaryAeroVironment remains a buy, with a $309.90 price target based on 2028 earnings despite recent post-earnings volatility.BlueHalo acquisition drove revenue growth but compressed margins, shifting AVAV's profile toward lower-margin services and altering near-term profitability.Revenue visibility stands at 93% for FY2026, but new bookings pipeline has shrunk, warranting close monitoring of order flow.AVAV is fairly valued on 2027 earnings; upside depends on executing growth and margin recovery, particularly as drone and counterdrone demand accelerates. gettinthere/iStock via Getty Images AeroVironment (AVAV) stock tumbled 12.9% following its Q2 earnings release. Since my last report, the stock is now up 5.7% which slightly better than the S&P 500’s 5.1% gain. However, we note that the stock price did surge as much as 80% easilyThis article was written byDhierin Bechai22.1K FollowersFollowDhierin-Perkash Bechai is an aerospace, defense and airline analyst. Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow does the BlueHalo acquisition impact AVAV's margin profile and valuation?BlueHalo adds significant revenue but at lower margins, compressing AVAV's overall margin profile and making premium valuation more dependent on successful execution and margin recovery.What does 93% revenue visibility mean for AVAV's FY2026 outlook?With 93% revenue visibility, AVAV is well-positioned to meet FY2026 targets, though a smaller new bookings pipeline could pressure future growth if not replenished.Given the current valuation, what is the risk-reward for AVAV over the next year?AVAV is fairly valued on 2027 earnings, leaving little margin for error; material upside is tied to 2028 execution and sustained demand for drone solutions.Recommended For You