AeroVironment, Inc. (NASDAQ:AVAV) shares experienced a decline on Wednesday after news emerged that the company was awarded a $75 million task order by the United States Air Force. This development coincided with a mixed performance in broader market indices, with the S&P 500 showing a slight gain while the Russell 2000 index edged lower.
The awarded task order is designated to advance biotechnology applications and materials science, aiming to support the Air Force's operational readiness and to extend the lifetime of vital defense assets. Over a duration of 60 months, AeroVironment will work on developing next-generation materials and manufacturing processes that enhance the durability and resilience of various Air Force systems. Key areas of focus include biologically driven mechanisms for material degradation, extraction of rare earth elements, innovations in flexible electronics, and advances in synthetic biology.
This contract reflects AeroVironment’s strategic commitment to applying scientific innovation in national defense contexts. However, despite the significance of the contract, the company’s stock has encountered downward pressure recently.
Last week, AeroVironment shares declined by nearly 20%, a movement partially attributed to a Benzinga report that highlighted the company among market losers. This drop followed news of a U.S. government-imposed stop-work order affecting AeroVironment’s SCAR defense program. The suspension raised investor concerns surrounding possible delays in revenue recognition and uncertainty regarding contract continuity, leading to increased selling activity in the stock.
Technically, AVAV currently trades approximately 5% below its 20-day simple moving average (SMA) and about 1.5% beneath its 100-day SMA, signaling some vulnerability in short-term price action. Over the previous 12 months, however, shares have appreciated by 74.11%, positioning the stock closer to its 52-week highs than lows.
Momentum indicators further illustrate mixed signals. The Relative Strength Index (RSI) stands at 48.62, indicating a neutral zone where the stock is not categorized as overbought or oversold. Conversely, the Moving Average Convergence Divergence (MACD) remains below its signal line, suggesting prevailing bearish pressure. Together, these metrics indicate unsettled momentum and highlight a degree of uncertainty in current trading trends.
Looking ahead, investors anticipate AeroVironment’s next earnings report, scheduled for March 3, 2026. Forecasts indicate an expected earnings per share (EPS) of $0.74, a substantial increase from $0.30 year-over-year. Revenue estimates have also been revised upward to approximately $484.71 million, compared with $167.64 million in the prior year, reflecting anticipated growth possibly related to the new contract and other activities.
Analyst sentiment remains bullish, with the stock holding a Buy rating and an average price target of $363.12. Recent analyst actions include Keybanc’s Overweight rating with a raised target of $330.00 announced on January 28 and BTIG’s Buy rating within a target price of $415.00 as of January 26. Earlier, Keybanc had initiated coverage with an Overweight rating and a target of $285.00 in December 2025.
AeroVironment also maintains notable representation in several influential exchange-traded funds (ETFs). Among these are significant weightings in the State Street SPDR S&P Aerospace & Defense ETF (NYSE:XAR) at 3.77% and 4.49%, as well as the Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) at 3.07%. The stock’s presence in these funds means that any substantial inflows or outflows in these ETFs could trigger automatic buying or selling of AVAV shares, thereby impacting its market price.
At the time of reporting, AeroVironment stock was trading at approximately $304.57, representing a decline of about 1.61% on the day. This price movement reflects the current market sentiment, taking into account the company’s recent contract win amid broader uncertainties.
In summary, AeroVironment's receipt of a $75 million contract from the U.S. Air Force marks a significant development with potential long-term benefits. Nevertheless, the stock's recent trajectory has been influenced by programmatic setbacks and technical indicators that highlight near-term challenges. Market participants are advised to monitor upcoming earnings releases and potential developments impacting government contracts and overall business performance.