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Investing.com -- Shares of AeroVironment (NASDAQ:AVAV) surged 7.9% Tuesday following the announcement of a $288 million delivery order for its Switchblade® loitering munition systems. This contract is part of a larger 5-year Indefinite Delivery, Indefinite Quantity (IDIQ) agreement with the U.S. Army, with a potential value of up to $990 million, disclosed in August 2024.
The company, recognized for its expertise in intelligent, multi-domain robotic systems, expressed its commitment to providing the U.S. Army with advanced and dependable loitering munition solutions. Brett Hush, AV’s senior vice president and general manager of Loitering Munition Systems, highlighted the company’s dedication to meeting the Army’s needs through robust supply chain and manufacturing capabilities.
The Switchblade system, which is combat-proven, offers high-precision optics and extended endurance, representing a significant advancement in extended-range loitering munition systems. It is designed to support multi-mission and multi-domain operations, which aligns with modern military strategies.
William Blair analyst Louie DiPalma commented on the significance of the contract, stating, "We believe this is the largest order in the company’s history by a wide margin, and is likely related to the U.S. Army’s LASSO program and the Department of Defense’s Replicator initiative involving AeroVironment’s long-range Switchblade-600 loitering missile systems... In our view, this order will go a long way to putting to bed concerns related to whether there is sufficient demand to replace Ukraine revenue."
Investors are responding positively to the news, which not only represents a substantial revenue opportunity for AeroVironment but also provides a level of assurance regarding the company’s financial health and future prospects. The deal is seen as a pivotal moment for AeroVironment, potentially quelling any doubts about the company’s market demand following the Ukraine conflict.
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