AeroVironment (AVAV) Stock Drops 6% as RBC Pulls Its Buy Rating

TLDR

• RBC Capital downgraded AVAV from Buy to Hold, cutting its price target from $210 to $180
• AVAV stock was trading around $157 premarket, down over 35% year-to-date heading into Thursday
• Management set a FY2030 revenue target of $3.5B–$4.0B, implying 15–20% annual organic growth
• The stock is weighed down by the cancellation of a billion-dollar Space Force SCAR contract and an $89.4M accounting restatement
• Piper Sandler kept its Overweight rating but also trimmed its price target to $235 from $248

AeroVironment (AVAV) stock slipped in premarket trading Thursday, falling to around $157 after RBC Capital downgraded the drone maker from Outperform to Sector Perform and cut its price target from $210 to $180.

AeroVironment, Inc., AVAV

The move came a day after AeroVironment held its Investor Day on July 8, where management laid out FY2027 revenue guidance of $2.125B to $2.225B — roughly 10% year-over-year growth — and a longer-term FY2030 target of $3.5B to $4.0B.

RBC analyst Ken Herbert acknowledged AeroVironment is well-positioned in its markets, but said the implied acceleration in revenue growth from 2028 to 2030, combined with flat defense spending and capacity expansion risks, would likely keep investors cautious until the path to those targets becomes clearer.

“The implied 2028 to 2030 acceleration in revenue growth, and material step up in margins, against a backdrop of greater investments, flat top-line defense spending, and potential capacity expansion risk, will keep investors on the sidelines until visibility on the upside is better,” Herbert wrote.

AeroVironment is targeting 15% to 20% annual sales growth through the end of the decade, with EBITDA margins expanding to 18%–20%, up from about 14% in fiscal year 2026.

Analyst Sentiment Still Mostly Positive

Despite the downgrade, AVAV remains broadly liked on Wall Street. About 84% of analysts still rate it a Buy — well above the 55%–60% Buy-rating average for S&P 500 stocks. The average analyst price target sits around $237.

Piper Sandler kept its Overweight rating after the Investor Day but trimmed its target to $235 from $248, adding to a sense that analysts are dialing back near-term expectations after a multi-week rebound in the stock.

SCAR Contract Cancellation and Accounting Restatement Hang Over the Stock

The deeper problem for AVAV goes back further. The stock was trading above $392 before the U.S. Space Force issued a stop-work order on the SCAR (Satellite Communication Augmentation Resource) program — a contract worth over $1 billion for AeroVironment’s BADGER phased-array antenna systems. Space Force concluded that commercially available solutions could do the job at lower cost.

That cancellation, combined with a June accounting restatement that revealed an $89.4 million understatement of operational losses, sparked multiple securities class action lawsuits. Both remain active overhangs on the stock.

AVAV has fallen 35% this year heading into Thursday’s session. Its 52-week high is $417.86; it briefly touched a 52-week low of $135.20.

The broader market offered little support Thursday, with the S&P 500 down 0.3% and the Dow off 1.1%, though the Nasdaq held slightly positive at +0.2%.

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