JPMorgan sees shares of AeroVironment rising as demand for drones and space capabilities swell. The bank initiated the aerospace and defense stock with an overweight rating. Analyst Seth Seifman’s $320 price target implies that shares of AeroVironment could rally 31% from here. “AeroVironment (also known as AV) looks well-positioned to deliver mid-teens growth thanks to its exposure to fast-growing areas within defense, both domestically and internationally, including drones, counter-drone systems, and space,” Seifman wrote. “AVAV is also one of the more experienced defense companies that could benefit from DoD efforts to expand the industrial base and adopt a more commercial approach.” AVAV 1Y mountain AVAV 1Y chart Seifman applauded AeroVironment’s leadership in the drone and counter-drone technology space. He wrote that the company is seeing rising demand, both domestically and internationally. AeroVironment’s acquisition of BlueHalo also gave the company access to “critical space capabilities,” Seifman said. The analyst sees growth in the mid-teens from the space and directed energy segment, of which BlueHalo is exposed to. Seifman expects the company’s profitability to grow from additional demand from the U.S. defense department. “DoD wants to buy more products along commercial lines, and AV’s model is consistent with this. It also facilitates profitable international sales, which were 24% of 1H26 revenue,” he wrote. These tailwinds, the analyst added, justify a higher valuation for shares of AeroVironment. “Since the end of 2020, AVAV has traded at 4.7x forward sales, on average, but we apply a premium given recent increases in the defense budget, the potential for more, rising budgets internationally, heightened geopolitical risk, and DoD efforts to expand the industrial base,” he said. AeroVironment stock has surged 55% in the past 12 months and less than 1% this year.
