Is AeroVironment Stock (AVAV) a Buy Ahead of Q3 Earnings?

Robotics systems group AeroVironment AVAV -3.25% ▼ is set to report its Q3 earnings report this week. The stock is down around 7% so far this year, due to questions around its $1.7 billion SCAR contract. It has been reported that the U.S. Space Force plans to reopen the SCAR program to more vendors, which raises concerns about future revenue.

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According to TipRanks’ Option Tool, options trader expect a 15.87% move in either direction in AVAV stock in reaction to its Q4 results.

What Wall Street Expects

Wall Street expects AVAV to post quarterly earnings of $0.68 per share in its upcoming report, which indicates a year-over-year increase of 126.7%. Revenues are expected to be $472.98 million, up 182.1% from the year-ago quarter.

Will AVAV beat these expectations? As can be seen below, it has a mixed record in doing so over recent quarters.

Key Issues Ahead of Earnings

In Q2, AVAV reported record second-quarter bookings of nearly $1.4 billion, with total contract awards reaching $3.5 billion. Revenue for the second quarter was approximately $473 million, a significant increase from the previous year.

It hailed significant progress on multiple programs of record, including the P550 being selected by the U.S. Army’s long-range reconnaissance program, estimated to be worth approximately $1 billion.

However, the elongated U.S. government shutdown presented challenges, causing delays in Foreign Military Sales (FMS) shipments.

According to analysts at Zacks, higher product revenues, primarily driven by the acquisition of BlueHalo in the first quarter of fiscal 2026 and increased global demand for the company’s Switchblade munitions systems associated given current global conflicts like Iran, are likely to have bolstered AVAV’s product sales in the to-be-reported quarter.

Rising global defense spending, notably in Europe, and the growing use of unmanned aerial systems support long-term demand for AVAV’s products. It recently secured a three-year, $97.4 million contract under the U.S. Army’s Aviation and Missile Technology Consortium to develop and deliver the Generative Environment for the Next Era of Spectral Imaging Stimulators.

However, issues remain around supply chain constraints and increased spending on production capacity could hit margins.

Is AVAV a Good Stock to Buy Now?

On TipRanks, AVAV has a Strong Buy consensus based on 13 Buy, 1 Hold and 1 Sell ratings. Its highest price target is $450. AVAV stock’s consensus price target is $356.69, implying a 61.40% upside.

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