What Happened?
Shares of aerospace and defense company AeroVironment (NASDAQ: AVAV) jumped 4.4% in the afternoon session after the stock's positive momentum continued as it secured a significant, 10-year contract from the U.S. Air Force valued at up to $499 million and announced upgrades to one of its key drone systems.
The indefinite-delivery/indefinite-quantity contract was awarded by the U.S. Air Force Research Laboratory to develop materials that protect military personnel from harmful electromagnetic radiation. The agreement included two initial task orders valued at a combined $246 million. Adding to the positive news, AeroVironment launched capability enhancements for its Puma LE drone, transforming it into a precision targeting platform with an integrated Laser Target Designator. Following these announcements, multiple Wall Street analysts raised their price targets for the company's stock, reflecting increased optimism.
After the initial pop the shares cooled down to $350.14, up 1.2% from previous close.
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What Is The Market Telling Us
AeroVironment’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 8% on the news that the company was selected for a $499 million U.S. Air Force contract and announced enhancements for its Puma LE unmanned aircraft system.
The 10-year contract was awarded by the U.S. Air Force Research Laboratory for its HELMSSMAN program. In separate news, AeroVironment launched capability upgrades for its Puma LE drone, including an integrated Laser Target Designator. This new feature transformed the aircraft into a precision targeting platform. The positive developments prompted Baird analyst Peter Arment to raise the price target on the stock to $350 from $267, reflecting strong confidence in the company's potential. This wave of good news fueled investor optimism and pushed the company's stock to a new all-time high.
AeroVironment is up 124% since the beginning of the year, and at $350.14 per share, has set a new 52-week high. Investors who bought $1,000 worth of AeroVironment’s shares 5 years ago would now be looking at an investment worth $5,560.
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