AeroVironment stock: Oppenheimer bullish amid counter-drone growth

 Oppenheimer is bullish on AeroVironment shares, initiating coverage with an Outperform rating and a $205 price target in a note to clients on Thursday. 

The firm said counter-drone systems are the company’s best next leg of growth.

AeroVironment shares jumped as high as $122.19 earlier today, but have since pared most of those gains, up just 0.1% to $118.58.

Analyst Patrick McCarthy acknowledged that the broader BlueHalo acquisition has disappointed, highlighting the SCAR/BADGER termination, a Space goodwill impairment, a restatement, and continued losses in the SCDE segment.

“However, it gave AVAV the building blocks of a layered counter-UAS architecture at a time when defeating inexpensive drones has become one of the DOW’s most urgent and best-funded priorities,” McCarthy wrote.

The analyst noted that Titan, LOCUST and Freedom Eagle-1 have moved from demonstration to funded production. 

Oppenheimer forecasts counter-UAS revenue rising from about 11% of total revenue in fiscal 2026 to about 20% in fiscal 2028, reaching nearly $950 million by fiscal 2030.

Funded backlog rose to $1.46 billion at the end of the fiscal first quarter. Together with first-quarter revenue, that covers about 73% of Oppenheimer’s fiscal 2027 revenue estimate of $2.20 billion. The firm forecasts revenue of $2.58 billion in fiscal 2028, with diluted EPS of $3.30 in fiscal 2027 and $4.25 in fiscal 2028.

“We treat space, cyber and electronic warfare as option value until they demonstrate consistent profitability,” the analyst said.

McCarthy flagged execution and cash flow as key tests, with Oppenheimer expecting a free cash flow inflection in fiscal 2028.