Citizens on Thursday reaffirmed its Market Outperform rating for AeroVironment (NASDAQ:AVAV) and kept a $400.00 price target in its latest research note. The firm observed that the shares, trading at $243.42, remain considerably below that target but sit above InvestingPro's Fair Value estimate - a juxtaposition Citizens flagged as indicating potential overvaluation even as its analysts retain a constructive stance.
In its note, Citizens highlighted several specific pillars supporting its positive view. The research team pointed to strengthening U.S. and global defense priorities that have accelerated funding and procurement across the company’s core domains. Those macro trends, the firm said, are materially boosting demand for AeroVironment’s systems.
Operational and transactional developments also factored into the outlook. Citizens singled out AeroVironment’s merger with BlueHalo as a timely move that creates a scaled design-to-production capability spanning drones, space and cyber. That combination is presented as enabling quicker iteration cycles and tighter integration of mission-level solutions.
International expansion was another central theme of the research note. Citizens described AeroVironment’s international footprint as a second growth engine, where cross-sell opportunities can be realized through the company’s network and an expanded solution set. The note specifically referenced alignment with NATO and Indo-Pacific priorities as supportive of that international growth pathway.
Citizens underscored AeroVironment’s track record of delivering unmanned systems at production scale as a competitive advantage. The firm also reiterated an addressable market estimate north of $50 billion as evidence of a long runway for sustained growth.
On the financial front, InvestingPro data cited in the note showed AeroVironment grew revenue by 79.89% over the last twelve months, and analysts are modeled to expect continued top-line expansion through the current year. Although the company is currently not profitable, InvestingPro Tips referenced in the note indicate analyst consensus projects AeroVironment will return to profitability this year, with an EPS forecast of $3.40.
The note arrived alongside operational updates that reinforce Citizens’ constructive view. AeroVironment’s UES division was awarded a $75 million contract from the U.S. Air Force. The five-year award targets development of advanced biotechnology and smart materials under the Functional Responsive Experimentation for Systems and Humans - FRESH - program at Wright Patterson Air Force Base in Ohio.
Separately, AeroVironment and CAL Analytics announced the opening of a Beyond Visual Line of Sight - BVLOS - airspace management facility in Springfield, Ohio. The site is intended to support military operations by integrating AeroVironment’s AV_Halo COMMAND control architecture with CAL Analytics’ Advanced Air Mobility platform.
Taken together, the combination of defense funding tailwinds, the BlueHalo merger, international expansion and recent contracts form the basis of Citizens’ continued Market Outperform rating. The research note presents a case where near-term operational momentum and a large addressable market support longer-term growth prospects, while acknowledging the company’s current non-profitable status and the valuation gap to the firm’s price target.
Contextual note: The research note referenced InvestingPro data and InvestingPro Tips for revenue growth and EPS projections.