AeroVironment (AVAV) shares rocketed 10.7% on Thursday, closing at $190.89, after the Department of Defense awarded the company a $500 million firm-fixed-price contract for counter-unmanned aerial systems (C-UAS). The contract, which runs through June 29, 2029, is expected to supply the U.S. Army with commercial counter-drone technologies and small-UAS defense capabilities, with work locations and funding determined per individual order. William Blair analyst Louie DiPalma attributed the deal to AeroVironment's TITAN system—a portable radio-frequency jammer that neutralizes drone threats and can be deployed in less than five minutes. TITAN orders more than doubled in fiscal 2026.
The contract win comes on the heels of record quarterly results. For the fiscal fourth quarter ended April 30, 2026, revenue surged 133% year-over-year to $641.6 million, driven partly by acquisitions of BlueHalo and Empirical Systems Aerospace. Organic revenue growth was approximately 31%. Non-GAAP adjusted EBITDA more than doubled to $140.1 million, lifting the margin to 22%, while adjusted earnings per share rose to $1.84 from $1.61. The company's funded backlog reached $1.2 billion, up from $726.6 million a year earlier, with full-year bookings of $2.7 billion against roughly $2 billion in revenue—a book-to-bill ratio of 1.4.
CEO Wahid Nawabi highlighted the counter-drone business as a major long-term growth driver, projecting it could become two to three times larger within 3–5 years. Beyond TITAN, AeroVironment is developing the LOCUST directed-energy laser (costing under $5 per shot) and the Freedom Eagle-1 kinetic interceptor, both of which management expects to secure production contracts soon—LOCUST potentially within three months and Freedom Eagle-1 by fall 2027. These developments underscore the heightened demand for drone and counter-drone tech amid conflicts in Ukraine and the Middle East.
Despite the rally, AVAV remains well below its 52-week high of nearly $420, having been battered earlier this year by the cancellation of the SCAR satellite program and a June accounting error write-down. The stock had fallen below $140 before the Q4 beat and the new contract. Jim Cramer cautioned about persistent short-seller pressure, calling their influence "powerful" and warning of potential short-term volatility. Wall Street, however, maintains a "Strong Buy" rating with a mean price target around $295.
