Key Takeaways
- AVAV shares climbed 1.1% following a CBS 60 Minutes feature highlighting its LOCUST laser-based counter-drone technology
- The LOCUST system costs only a few dollars per engagement compared to $4 million missiles targeting $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 write-down following the termination of its Space Force SCAR program
- Wall Street analyst maintains Strong Buy rating with $363 target price, pointing to expanding global drone warfare demand
AeroVironment’s advanced laser defense platform received prime-time exposure over the weekend, catching investor attention.
Shares of AVAV increased 1.1% to $209.29 during Monday’s opening session after the company’s CEO, Wahid Nawabi, demonstrated its directed energy capabilities on CBS’s flagship news program 60 Minutes. For context, the S&P 500 gained 0.6% while the Dow advanced 0.4% during the same period.
The broadcast highlighted a critical asymmetry in modern warfare economics: Iranian-made Shahed drones cost between $20,000 and $40,000 to produce, yet the interceptor missiles deployed against them carry a $4 million price tag. This cost imbalance has accelerated Pentagon interest in more economical countermeasures.
Enter LOCUST—Laser Optical Counter-Unmanned Aerial System for Tactical Use. This AI-powered platform autonomously identifies and tracks aerial threats, delivering concentrated energy that destroys drone structures within seconds. The operational cost per engagement runs just a few dollars.
The technology has moved beyond testing—it’s already operational along America’s southern border, where it neutralizes cartel surveillance drones carrying drugs.
Order Book Growth and Manufacturing Scale-Up
While the television appearance generated buzz, AeroVironment’s fundamental momentum extends well beyond media coverage. The defense contractor reported Q3’26 funded backlog growth of 47% compared to the prior year, translating to a healthy 1.07x book-to-bill metric.
During the third quarter of fiscal 2026, the U.S. Army committed $186 million for Switchblade 600 Block 2 and Switchblade 300 loitering munition systems. This purchase falls under a larger 5-year framework agreement valued at $990 million that was secured in 2024.
AVAV is currently expanding its Salt Lake City production campus to accommodate an additional $2 billion in annual revenue capacity. The company also projects Titan C-UAS manufacturing will quadruple in 2026 and increase tenfold by 2030.
In December 2025, the Army granted AVAV another 5-year indefinite delivery/indefinite quantity contract worth $874 million to facilitate foreign military sales of its unmanned and counter-unmanned systems.
The company is simultaneously pursuing contracts with Pacific allies including Taiwan, Japan, and South Korea for autonomous defense platforms.
Space Contract Termination Creates Headwind
Not everything is proceeding smoothly. AeroVironment recently exited its agreement with the U.S. Space Force to develop the BADGER phased array antenna after failing to reach acceptable terms on a firm-fixed-price arrangement.
This decision triggered a $151 million goodwill impairment charge during Q3’26 related to its aerospace division. Leadership indicated direct revenue exposure would stay below $100 million, though as much as $1.5 billion in unfunded backlog could be impacted.
The company retains the ability to compete for the program under revised contract terms.
Heading into Monday’s session, AVAV shares were down 14% for the year to date—primarily attributable to the contract cancellation news—though the stock remained up 60% over the trailing twelve months.
One Wall Street analyst maintains a Strong Buy recommendation on AVAV with a $363 price objective, based on 53.18x FY27 EV/aEBITDA. Current trading multiples of 50.29x sit below the stock’s historical median valuation.
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