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Investing.com - RBC Capital has raised its price target on AeroVironment (NASDAQ:AVAV) to $275 from $200 while maintaining an Outperform rating on the stock. The company, currently trading at $248.10 with a market cap of $11.3 billion, has shown remarkable momentum with a 53% price return over the past six months. According to InvestingPro analysis, the stock is currently trading above its Fair Value.
The firm cited increased program opportunities and what it views as a conservative fiscal year 2026 guidance as key factors behind the price target adjustment. RBC believes the company has strengthened investor confidence in the strategic rationale for its BlueHalo acquisition. InvestingPro data shows strong fundamentals, with revenue growing at 14.5% and a healthy current ratio of 3.52, indicating solid operational efficiency.
Switchblade sales represent a particular point of strength for AeroVironment, according to RBC, especially against the backdrop of increased NATO spending. The company exited fiscal year 2025 with an annual run rate of approximately $500 million for the Switchblade product line. With total revenue of $820.6 million in the last twelve months, the company maintains a "GOOD" Financial Health score according to InvestingPro, which offers 18 additional investment tips for this stock.
RBC noted that eight countries have placed firm orders for the Switchblade system, with eight more currently going through the Foreign Military Sales process. The firm believes investor confidence is growing in Switchblade’s potential to reach an annual run-rate of more than $1 billion.
The Red Dragon program, while still early in terms of revenue contribution, is expected to be a key growth driver across NATO and within the Pacific Deterrence Initiative, according to RBC’s analysis.
In other recent news, AeroVironment announced proposed public offerings totaling $1.35 billion, including $750 million in common stock and $600 million in convertible senior notes due 2030. The company plans to use the proceeds to repay existing debts under a term loan and revolving credit facility, with any remaining funds allocated for general corporate purposes such as increasing manufacturing capacity. These offerings follow AeroVironment’s acquisition of BlueHalo Financing Topco, LLC, which was finalized on May 1. J.P. Morgan and BofA Securities are leading the book-running for these offerings, with Raymond (NSE:RYMD) James also involved. The company emphasized that the offerings are subject to market conditions and are not guaranteed to be completed. Additionally, Goldman Sachs initiated coverage on AeroVironment with a Buy rating, citing increased global demand for the company’s products due to the Ukraine conflict. BTIG also raised its price target for AeroVironment to $300, maintaining a Buy rating and highlighting the company’s attractive valuation compared to its peers in the defense technology sector. AeroVironment has filed a registration statement with the SEC for these offerings, reflecting its strategic move to restructure debt and potentially expand production capabilities.
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