Key Highlights
- AVAV shares climbed 1.1% following a CBS 60 Minutes feature showcasing its LOCUST laser counter-drone technology
- The LOCUST system costs mere dollars per engagement compared to $4 million missiles used against $20,000–$40,000 drones
- The company’s funded backlog expanded 47% year-over-year during Q3’26, achieving a 1.07x book-to-bill ratio
- AVAV recorded a $151 million goodwill impairment following termination of its SCAR contract with the Space Force
- An analyst maintains a Strong Buy rating with a $363 target price, driven by expanding global demand for drone technology
AeroVironment’s laser defense technology caught national attention over the weekend, triggering positive market momentum.
Shares of AVAV advanced 1.1% to $209.29 during Monday’s early session following CEO Wahid Nawabi’s appearance on CBS’s 60 Minutes program, where he demonstrated the company’s directed energy capabilities. This outpaced the S&P 500’s 0.6% gain and the Dow’s 0.4% increase during the same period.
The broadcast highlighted a critical cost disparity: Iranian Shahed drones cost between $20,000 and $40,000 to manufacture, yet the missiles deployed to neutralize them carry a $4 million price tag. This economic imbalance has driven the Pentagon to pursue more affordable alternatives.
LOCUST — an acronym for Laser Optical Counter-Unmanned Aerial System for Tactical Use — represents one such alternative. The system employs artificial intelligence to identify and track aerial threats, destroying drone structures within seconds. Each engagement costs only a few dollars.
The technology has already seen operational deployment along the U.S.-Mexico border, where authorities use it to neutralize drug trafficking organization drones.
Contract Growth and Manufacturing Scale-Up
Beyond the television exposure, AVAV’s business momentum extends to fundamental performance metrics. The company concluded Q3’26 with funded backlog growth of 47% compared to the prior year, reflecting a healthy 1.07x book-to-bill ratio.
During the third quarter of fiscal 2026, the U.S. Army issued a $186 million order for Switchblade 600 Block 2 and Switchblade 300 platforms. This order falls under a broader 5-year, $990 million contract secured in 2024.
AVAV is currently expanding its Salt Lake City production complex to accommodate $2 billion in incremental annual revenue capacity. The company also plans to quadruple Titan C-UAS production during 2026, with a 10x increase targeted by 2030.
Last December, the Army granted AVAV an additional 5-year, $874 million IDIQ contract supporting international sales of its unmanned and counter-unmanned systems.
The company is also pursuing opportunities with Asian partners, including Taiwan, Japan, and South Korea, for autonomous defense platforms.
Space Program Complications
Not all developments have been favorable. AVAV recently ended its agreement with the U.S. Space Force for the BADGER phased array antenna program after failing to reach agreement on firm-fixed-price contract terms.
The termination resulted in a $151 million goodwill impairment charge during Q3’26 related to its space operations. Executives indicated the revenue impact would remain under $100 million, though as much as $1.5 billion in unfunded backlog could be at risk.
The company retains the opportunity to resubmit a proposal under revised contractual terms.
Prior to Monday’s session, AVAV had declined 14% year to date — predominantly due to the contract cancellation — while maintaining a 60% gain over the trailing twelve months.
An analyst covering the stock maintains a Strong Buy rating with a $363 price objective, based on 53.18x FY27 EV/aEBITDA. Current trading multiples sit at 50.29x, below the stock’s historical median valuation.
