Key Highlights
- Shares increased 1.1% following a CBS 60 Minutes segment featuring the LOCUST laser counter-drone platform
- The LOCUST system operates at approximately a few dollars per engagement compared to $4 million missiles targeting $20,000–$40,000 drones
- Funded order backlog expanded 47% versus the prior year in Q3’26, achieving a 1.07x book-to-bill metric
- The company recognized a $151 million goodwill write-down following termination of its Space Force SCAR program
- Wall Street analyst maintains Strong Buy outlook with $363 target price, pointing to expanding global drone market
AeroVironment’s directed energy defense platform received prime-time exposure this weekend, catching investor attention.
Shares climbed 1.1% to $209.29 during Monday’s opening session after CEO Wahid Nawabi showcased the firm’s laser-based defense capabilities on CBS’s 60 Minutes program. For context, the S&P 500 advanced 0.6% while the Dow gained 0.4% during the same period.
The broadcast highlighted a critical economic challenge: Iranian-manufactured Shahed drones carry price tags of $20,000–$40,000 per unit. Traditional interceptor missiles used to neutralize them run approximately $4 million each. This cost disparity has driven the Department of Defense toward more economical countermeasures.
LOCUST — the Laser Optical Counter-Unmanned Aerial System for Tactical Use — represents such an alternative. Leveraging artificial intelligence for target acquisition and tracking, the platform can penetrate drone airframes within seconds. Each engagement costs only a few dollars to execute.
The technology has already seen operational deployment at the southern U.S. border, where authorities employ it to neutralize narcotics trafficking organization drones.
Order Book Growth and Manufacturing Scale-Up
Beyond the television publicity, AeroVironment benefits from substantial business momentum. The company finished Q3’26 with funded backlog growing 47% compared to the year-ago period, translating to a 1.07x book-to-bill ratio.
During the third quarter of fiscal 2026, the U.S. Army issued a $186 million purchase order for Switchblade 600 Block 2 and Switchblade 300 platforms. This order falls under a comprehensive 5-year, $990 million agreement secured in 2024.
AVAV is currently expanding manufacturing operations at its Salt Lake City facility to support $2 billion in incremental annual revenue capacity. Additionally, management plans to quadruple Titan C-UAS production in 2026 and increase output tenfold by decade’s end.
Last December, the Army granted AeroVironment another 5-year IDIQ contract valued at $874 million to facilitate foreign military sales of drone and counter-drone technologies.
The company is also pursuing negotiations with Pacific allies including Taiwan, Japan, and South Korea regarding autonomous defense platforms.
Defense Space Program Withdrawal
Not all developments have been favorable. AeroVironment recently withdrew from its U.S. Space Force contract for the BADGER phased array antenna platform after unsuccessful negotiations regarding firm-fixed-price contract terms.
The termination triggered a $151 million goodwill impairment charge in Q3’26 related to the space operations segment. Executive leadership indicated revenue exposure would remain under $100 million, though as much as $1.5 billion in unfunded backlog could be impacted.
Management retains the opportunity to resubmit proposals under revised contractual parameters.
Prior to Monday’s session, shares had declined 14% year-to-date — predominantly reflecting the contract termination — while still maintaining a 60% gain over the trailing twelve months.
A Wall Street analyst currently rates AVAV as a Strong Buy with a $363 price objective, based on 53.18x FY27 EV/aEBITDA. Current trading multiples of 50.29x remain below historical median valuations.
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