Shares of unmanned military technology provider AeroVironment (NASDAQ: AVAV) gained on Thursday after securing a fresh endorsement from Wall Street.
Bank of America Securities initiated coverage on the drone maker’s stock with a Buy rating and a $300 price target, citing new government policies designed to boost US drone production as a growth catalyst.
Analyst upgrade highlights drone momentum
BofA Securities analyst Ronald Epstein launched coverage of AeroVironment with an optimistic outlook, pointing to Defense Secretary Pete Hegseth’s July policy shift as a key factor supporting long-term demand.
The initiative, described as aimed at “unleashing American drone dominance,” introduced measures to accelerate drone production, expand supply to combat units, and integrate drone training for officers.
Epstein called the policy change a “pivotal positive catalyst” for AeroVironment, reflecting heightened government support for unmanned systems.
He set a $300 target price for the stock, a level slightly above the current Wall Street average.
Shares responded positively, rising 2.03% in premarket trading to $277.60, outpacing broader market futures, with the S&P 500 and Dow Jones Industrial Average each gaining less than 1%.
Strong consensus among analysts
AeroVironment stands out for its unusually high level of analyst confidence.
According to FactSet, all 14 analysts covering the company currently rate the stock a Buy, giving it a 100% Buy-rating ratio.
By comparison, the average Buy-rating ratio for S&P 500 stocks sits around 55%.
The average analyst price target is about $303, suggesting confidence in AeroVironment’s ability to expand its top and bottom lines.
Wall Street consensus projects sales growth of 23% and gross profit growth of 25% annually over the next three years.
Such optimism reflects both AeroVironment’s strong market positioning and broader trends in defense spending.
Investors have increasingly gravitated toward drone technology stocks, seeing them as beneficiaries of rising global defense budgets and the US government’s emphasis on unmanned capabilities.
Stock performance and valuation
The renewed optimism comes on top of an already strong year for AeroVironment.
In its first quarter results, the company reported a revenue of $454.7 million, marking a 140% increase from the $189.5 million reported in the same period of fiscal 2025.
The growth was driven by a $154.0 million rise in product sales and an $111.2 million increase in service revenue.
The acquisition of BlueHalo, completed on May 1, 2025, contributed $123.7 million to product revenue and $111.5 million to service revenue in the quarter.
Shares have surged about 77% year-to-date, significantly outperforming the broader market.
The rally has been fueled by expectations of greater military demand and expanding applications of unmanned technologies.
However, the stock’s rapid ascent has also pushed valuations higher.
AeroVironment currently trades at about 58 times estimated 2026 earnings, placing it at the upper end of its historical range.
While the elevated multiple reflects strong growth expectations, it also signals that the stock may already be pricing in much of the anticipated expansion.
For now, investors appear comfortable with the premium, buoyed by government initiatives and unanimous analyst backing.
The challenge for AeroVironment will be to deliver on growth projections in an increasingly competitive and strategically vital defense technology sector.
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