What Happened?
Shares of aerospace and defense company AeroVironment (NASDAQ: AVAV) jumped 28.4% in the morning session after the company reported fourth-quarter 2025 results that significantly beat analyst expectations and provided strong forward guidance.
The company announced fourth-quarter earnings per share of $1.61, easily surpassing the forecast of $1.40. Revenue also impressed, coming in at $275.1 million, well ahead of the $242.14 million consensus estimate and marking a 40% increase from the previous year.
Investors were further encouraged by the company's record-setting fiscal year, which saw $1.2 billion in total bookings and ended with a funded backlog of $726 million, up 82% year-over-year.
Looking ahead, AeroVironment issued an optimistic forecast for fiscal year 2026, projecting revenue between $1.9 billion and $2.0 billion. This strong performance and positive outlook highlight robust demand in the defense technology and unmanned aircraft markets.
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What The Market Is Telling Us
AeroVironment’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for AeroVironment and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock gained 17.2% on the news that the company announced a 5-year $990 million contract with the U.S. Army to supply Lethal Unmanned Systems (LUS). The systems (LUS) will equip soldiers with the next generation of Loitering Munition Systems (also called Switchblade), which are like portable drones capable of targeting and destroying moving targets such as armored vehicles and tanks.
Brett Hush, AV's senior vice president and general manager of Loitering Munition Systems noted "This latest contract underscores the unmatched maturity and effectiveness of our system, as well as AV's strategic positioning to rapidly produce and deliver these cutting-edge solutions to operators in the field."
Following the announcement, Baird analyst Peter Arment upgraded the stock's rating from Neutral to Buy, adding "This record five-year indefinite delivery, indefinite quantity contract from the U.S. Army will enable significant inventory levels of the SwitchBlade product."
AeroVironment is up 49.8% since the beginning of the year, and at $234.42 per share, it is trading close to its 52-week high of $235.17 from November 2024. Investors who bought $1,000 worth of AeroVironment’s shares 5 years ago would now be looking at an investment worth $2,973.
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