Raymond James says buy the dip on mid-cap drone maker AeroVironment

Raymond James says buy the dip on AeroVironment, a mid-cap drone maker. Analyst Brian Gesuale believes the name offers one of the cleanest ways to invest in recent changes in military affairs, seeing a "long runway for revenue growth" for the firm.

Raymond James upgraded AeroVironment shares to “outperform” from “market perform," CNBC reports. Gesuale set a target price of $210 per share, according to Yahoo Finance data. AeroVironment shares gained 5.7% on Thursday to $149.30 apiece, meaning the TP implies upside of almost 41% from that close. The stock was down about 2% in premarket trading on Friday as of this writing.

The high target price is justified by AeroVironment’s recent strong order flow, improving order book quality, and accelerating product momentum in its Autonomous Systems segment, Gesuale wrote in a note.

The U.S. Army is negotiating with the drone manufacturer over its Enduring High Energy Laser program, Lt. Gen. Frank Lozano, who oversees the service’s missile programs, said on Tuesday. Raymond James estimates that the contract, if awarded, could bring AeroVironment about $500 million.

A week earlier, the company secured a flexible contract of the same value to supply counter-drone systems for a U.S. homeland security program. Gesuale estimates that AeroVironment’s order book could grow 20% quarter over quarter, making it an industry leader in counter-drone solutions. As of April 30, the company had $1.2 billion in funded orders. This figure comprises contracts that have already received funding but have yet to be fulfilled.

“AV is one of the cleanest ways to invest in the modernization of warfare, with exposure to nearly every major defense growth vector,” the Raymond James analyst said.

AeroVironment shares have fallen more than 38% year to date and 44.5% over the last 12 months.

The U.S. government shutdown in 2025 halted federal funding and prompted the management to lower its guidance for fiscal 2026, which ended April 30, CNBC notes. In March, AeroVironment lost a contract worth about $1.7 billion with the U.S. Space Force to develop new antennas for aging military satellites.

In early July, the company unveiled a growth strategy through 2030 that calls for revenue to increase 15-20% annually. RBC Capital subsequently downgraded the stock to “hold” from “buy” and lowered its target price to $180 from $210 per share, implying 20.5% upside from the latest closing price. The bank cited risks to AeroVironment’s long-term growth targets, including potential capacity expansion risks and flat top-line defense spending.

Most Wall Street analysts nevertheless remain upbeat on the stock, with 20 “buy” calls, two “hold” recommendations, and no “sell” ratings.