Why AeroVironment Stock Popped Friday

By Rich Smith – Dec 19, 2025 at 1:47PM ESTKey PointsKeyBanc analyst Michael Leshock initiated AeroVironment stock with a buy rating this morning.Leshock sees AV stock as attractively priced and well-positioned to profit from rising space and military spending.These 10 Stocks Could Mint the Next Wave of Millionaires ›NASDAQ: AVAVAeroVironmentMarket Cap$12BToday's Changeangle-down(5.42%) $12.51Current Price$243.20Price as of December 19, 2025 at 2:44 PM ETAeroVironment wins an upgrade -- but does this unprofitable drone stock deserve it?Military drones manufacturer AeroVironment (AVAV +5.42%) stock gained 4% through 1:30 p.m. ET Friday. You can thank KeyBanc analyst Michael Leshock for that. This morning, Leshock initiated coverage on AeroVironment with an overweight rating and a $285 price target. Image source: Getty Images. Why KeyBank loves AeroVironment stock Although AeroVironment also makes some drones for civilian use, Leshock likes the company most for its "strong leverage to defense tech and space growth," as StreetInsider.com reports today. AV boasts a differentiated product portfolio, which began with military drones but is now expanding into interceptor drones to shoot down other drones, industry-leading profit margins, and has a competitive moat from in the form of robust defense backlog and new business from its BlueHalo acquisition, which AV bought for $4.1 billion back in 2024 -- a price I said was nice back when the acquisition was announced, being at a much lower price-to-sales ratio than AeroVironment's own. It also gave AV stock exposure to the space industry, an area of robust growth in military spending. ExpandNASDAQ: AVAVAeroVironmentToday's Change(5.42%) $12.51Current Price$243.20Key Data PointsMarket Cap$12BDay's Range$232.15 - $243.9352wk Range$102.25 - $417.86Volume28KAvg Vol1.1MGross Margin21.66% Is AeroVironment stock a buy? From a valuation perspective, Leshock notes that AV stock is trading for an enterprise value of about 28 times earnings before interest, taxes, depreciation, and amortization (EBITDA), which is right in the middle of its historical range -- and recommends buying the stock as it climbs back higher toward a 35-times multiple.Advertisement I'm not so sure he's right about that, though. "EBITDA" or no EBITDA, I can't help noticing that AV stock today is unprofitable when earnings are calculated according to generally accepted accounting principles (GAAP), and burned about $240 million in negative free cash flow over the past 12 months. Indeed, AV's been FCF-negative for close to five straight years now. Until that changes, I cannot recommend buying AeroVironment stock. Ktos 4.5Read NextDec 12, 2025 •By Josh Kohn-LindquistWhy AeroVironment Stock Sank This WeekDec 10, 2025 •By Joe TenebrusoWhy AeroVironment Stock Fell TodayDec 9, 2025 •By Scott LevineWhy AeroVironment Stock Is Losing Altitude in After-Hours TradingDec 1, 2025 •By John BromelsWhat Every AeroVironment Investor Should Know Before BuyingNov 28, 2025 •By John BromelsEvaluating AVAV Stock's Actual PerformanceNov 6, 2025 •By Scott LevineWhy AeroVironment Stock Is Losing Altitude TodayAbout the AuthorRich Smith is a contributing Motley Fool defense and stock market analyst covering publicly traded and emerging companies in defense, space, aerospace, and other sectors. Prior to The Motley Fool, Rich practiced international corporate law for Clifford Chance in Russia, and for the Russian-Ukrainian Legal Group in Moscow, Kyiv, and Washington, D.C. He holds a bachelor’s degree in international relations from the College of William & Mary, a law degree from the University of Baltimore, and a language certification from the International Institute of Russian Language & Culture in Tver, Russian Federation. The Globe and Mail once featured him as “one of the best stock pickers since 2009.”TMFDittyX@RichSmithFoolStocks MentionedAeroVironmentNASDAQ: AVAV$243.20 (+0.05%) $+12.51*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement