AeroVironment, Inc.
Industrials · Aerospace & Defense
AVAV is the listed pure-play on attritable autonomous systems - small drones plus loitering munitions - at the moment Western doctrine is being rewritten around them by the Ukraine war. The BlueHalo merger (~$4B all-stock, expected close mid-CY26) widens the surface from tactical UAS into space, counter-UAS, directed energy, and C5ISR, recasting AVAV as a mid-cap autonomy prime rather than a single-product drone vendor.
- Switchblade 300/600 is the de facto NATO loitering munition; Ukraine PDA drawdowns and DoD replenishment lines now run multi-year
- Replicator initiative explicitly targets thousands of attritable autonomous systems by FY26 - AVAV's product mix is the canonical fit
- BlueHalo merger adds ~$1B revenue + space/directed-energy exposure and is accretive on a pro-forma basis
- Backlog and book-to-bill have re-rated post-Ukraine; FMS pipeline (Taiwan, Poland, allies) extends the tail
- Founder-mode execution under Wahid Nawabi; small enough to compound, large enough to prime
- Lumpy government revenue; single-quarter slips on contract timing routinely move the stock 10%+
- Switchblade faces a crowded loitering-munition field (Anduril, Shield AI, $KTOS, foreign primes); pricing power not yet proven at scale
- Pro-forma multiple already prices the merger synergies; integration risk is real
- Stock-based comp and merger dilution overhang; FCF conversion lags reported EPS
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