AeroVironment Inc.‘s (NASDAQ:AVAV) quarterly results sparked a wave of bullish commentary Monday, with investors looking beyond the quarter and toward the company’s long-term role in the rapidly evolving defense technology market.
Investors Focus On The Next Big Story
Investor Shay Boloor said AeroVironment “absolutely crushed” its earnings and described the company as “one of the clearest plays on modern drone warfare,” citing growing demand for expendable drones and loitering munitions.
During Monday’s earnings call, CEO Wahid Nawabi said AeroVironment’s counter-UAS, or counter-drone business, remains in the “early stages” of adoption and could become as large as, or even two to three times larger than, its existing franchise over the next three to five years.
Market commentator The Analyst on X said the earnings signaled that the “drone defense super-cycle has arrived,” with governments increasingly prioritizing autonomous systems, loitering munitions and counter-UAS capabilities in defense spending.
Drone Stocks To Watch
The optimism around the drone sector has also put other unmanned aerial systems companies in focus, including Red Cat Holdings Inc. (NASDAQ:RCAT), Ondas Inc. (NASDAQ:ONDS), Unusual Machines Inc. (NYSE:UMAC) and Kratos Defense & Security Solutions Inc. (NASDAQ:KTOS), as investors increasingly look for broader exposure to the drone and autonomous systems theme.
In extended trading on Monday, Red Cat rose 3% following AeroVironment’s earnings report. Ondas gained 1.75%, while Unusual Machines and Kratos Defense & Security Solutions advanced 2.86% and 3.48%, respectively.
ETF Exposure
The REX Drone ETF (NASDAQ:DRNZ) provides exposure to the drone industry, with holdings including AeroVironment, Red Cat Holdings and Kratos Defense & Security Solutions, and it charges an expense ratio of 0.65%. Shares have fallen 8.76% year-to-date and 12.98% over the past year.
The Defiance Drone and Modern Warfare ETF (NYSE:JEDI) provides exposure to drone and modern warfare companies, charges a 0.69% expense ratio, and has gained 10.87% so far this year and 9.64% over the past year.
The ARK Space & Defense Innovation ETF (NYSE:ARKX), which holds major aerospace and defense companies including AeroVironment, Space Exploration Technologies Corp. (NASDAQ:SPCX) and Kratos, has gained 10.36% year to date and 37.13% over the past 52 weeks.
‘A History Of Guiding Conservatively’
AeroVironment reported fourth-quarter revenue of $641.62 million and adjusted EPS of $1.84, topping estimates of $558.81 million and $1.46, respectively, according to Benzinga Pro.
The company guided for fiscal 2027 revenue of approximately $2.13 billion to $2.23 billion versus estimates of $2.19 billion, and adjusted EPS of $3.02 to $3.34 versus estimates of $3.98.
Future Fund Managing Partner Gary Black said AeroVironment has “a history of guiding conservatively at the beginning of the fiscal year,” after the company’s fiscal 2027 guidance came in below Wall Street expectations.
Price Action: After closing, AVAV rose 0.76% to $139 on Monday and soared 20.86% in pre-market trading on Tuesday.
Benzinga edge rankings indicate AVAV has a Momentum score in the 2nd percentile, and a negative price trend across the short, medium and long term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Piotr Swat / Shutterstock
Login to comment