Why Are AeroVironment (AVAV) Shares Soaring Today
What Happened:
Shares of aerospace and defense company AeroVironment (NASDAQ:AVAV) jumped 17.2% in the morning session after the company announced a 5-year $990 million contract with the U.S. Army to supply Lethal Unmanned Systems (LUS). The systems (LUS) will equip soldiers with the next generation of Loitering Munition Systems (also called Switchblade), which are like portable drones capable of targeting and destroying moving targets such as armored vehicles and tanks.
Brett Hush, AV's senior vice president and general manager of Loitering Munition Systems noted "This latest contract underscores the unmatched maturity and effectiveness of our system, as well as AV's strategic positioning to rapidly produce and deliver these cutting-edge solutions to operators in the field."
Following the announcement, Baird analyst Peter Arment upgraded the stock's rating from Neutral to Buy, adding "This record five-year indefinite delivery, indefinite quantity contract from the U.S. Army will enable significant inventory levels of the SwitchBlade product."
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What is the market telling us:
AeroVironment’s shares are somewhat volatile and over the last year have had 14 moves greater than 5%. But moves this big are very rare even for AeroVironment and that is indicating to us that this news had a significant impact on the market’s perception of the business.
AeroVironment is up 55.3% since the beginning of the year, but at $191.84 per share it is still trading 12.5% below its 52-week high of $219.31 from June 2024. Investors who bought $1,000 worth of AeroVironment’s shares 5 years ago would now be looking at an investment worth $3,725.
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