Goldman Sachs maintains Buy rating on AeroVironment, with Investor Day reinforcing expectations for multi-year growth and margin expansion

Overview

After attending AVAV's Investor Day in New York and updating its model following recent results, Goldman Sachs maintains its Buy rating on AeroVironment Inc. The report's core view is that the company is well positioned in high-growth defense-related verticals, with businesses including precision strike, defense systems, unmanned systems, and directed energy expected to drive multi-year revenue growth, while capacity investments should support greater scale and margin expansion.

Core views

Goldman Sachs believes the 2030 financial targets disclosed at Investor Day reinforce AVAV's medium- to long-term growth thesis: the company expects 15%-20% organic revenue CAGR through 2030, FY30 revenue of $3.5 billion-$4.0 billion, and an adjusted EBITDA margin of 18%-20%. If achieved, EBITDA would be 30%-40% above market consensus expectations. In the near term, F4Q26 revenue, adjusted EBITDA, and EPS all exceeded consensus, but FY27 EPS and EBITDA guidance were below consensus, primarily due to capital expenditures and capacity expansion investments. Goldman Sachs lowered its 12-month price target from $361 to $326 but maintained its Buy rating.

Analysis framework

The report analyzes management's Investor Day targets, FY27 guidance, F4Q26 results, growth outlook by business, backlog, free cash flow, and valuation multiples. The price target is based on a 7.0x CY27E price-to-sales multiple, incorporating updates to the growth and margin trajectory as well as a market-capitalization re-rating relative to peers.

Methodology notes

• Valuation methodsPrice-to-sales target multiple

  Price target valuation method

  Goldman Sachs uses a 7.0x CY27E price-to-sales multiple to derive a 12-month price target of $326, down from the previous $361 target based on an 8.5x CY26E price-to-sales multiple.

• factor_profileGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factor profile

  GS Factor Profile evaluates growth, financial returns, valuation multiples, and composite factors by comparing key company attributes with Goldman Sachs-covered stocks and industry peers. The composite factor considers the relative attractiveness of growth, financial returns, and lower valuation multiples on average.

• m_and_aM&A Rank

  M&A potential score

  Goldman Sachs' M&A Rank uses a score of 1 to 3 to assess the likelihood that a company becomes an acquisition target. AVAV is disclosed as M&A Rank 3, indicating that M&A factors are generally not important to the price target.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• AEROVIRONMENT INC (AVAV.O)

  Core covered security

  Strengths

  Positioned in growth markets including unmanned systems, precision strike, directed energy, and defense electronics; F4Q26 revenue and adjusted EBITDA exceeded expectations; backlog growth was strong; 2030 targets indicate high revenue CAGR and room for margin expansion.

  Weaknesses

  FY27 EPS and adjusted EBITDA guidance are below consensus; near-term capital expenditures are elevated; certain businesses such as Cyber & Mission Systems were previously affected by DOGE and government shutdowns.

  Comparison

  Goldman Sachs compares the company with global aerospace and defense companies under coverage and applies a 7.0x CY27E price-to-sales multiple, down from the previous 8.5x CY26E price-to-sales multiple.

  Risks

  Uncertainty around large program awards, entry of new competitors, capital allocation, and acquisition integration risks.

Key data

• 12-month price target$326.00Previous price target was $361.00.
• Current share price$157.78Price disclosed on the report cover.
• Implied upside106.6%Based on the target price and current price.
• FY27 revenue guidance$2.125bn-$2.225bnMidpoint represents approximately 10% year-over-year growth; FactSet consensus is $2.16bn.
• FY27 adjusted EBITDA guidance$305mn-$325mnMidpoint margin is approximately 14.5%, below consensus of $342mn.
• FY30 revenue target$3.5bn-$4.0bnCorresponds to 15%-20% organic revenue CAGR.
• FY30 adjusted EBITDA margin target18%-20%Long-term target disclosed at Investor Day.
• F4Q26 revenue$642mnUp 133% year over year and 15% above FactSet consensus.
• F4Q26 adjusted EBITDA$140mn9% above consensus, corresponding to a 21.8% EBITDA margin.
• Funded backlog$1.2bnUp 9% sequentially and 65% year over year.
• Cash and cash equivalents$632mnApproximately $12.52 per share at quarter-end.
• Four-year program capture opportunity~$37bnCompany estimate covering program opportunities across its product portfolio.

Impact & implications

The report's investment implications for AVAV are positive: even though the price target was lowered due to valuation methodology and peer re-rating, Goldman Sachs still sees significant upside relative to the company's long-term revenue expansion, margin improvement, and defense demand opportunities. Capital expenditures are expected to rise to 12%-14% of sales in FY27, which could weigh on near-term earnings and free cash flow, but Goldman Sachs views this as necessary investment to support long-term growth.

Risks

• Awards for large potential programs could affect the timing of revenue realization.
• New entrants could intensify competition in the unmanned systems and counter-unmanned aircraft markets.
• If higher capital expenditures and capacity expansion do not translate into orders and revenue, returns could be pressured.
• Acquisition integration and capital deployment involving BlueHalo and other assets carry execution risks.
• FY27 EPS and adjusted EBITDA guidance are below consensus, which could pressure near-term earnings expectations.

What to watch

• Execution against FY27 revenue, adjusted EBITDA, and EPS guidance.
• Order and delivery cadence for core products including Switchblade, Titan, P550, Jump 20-X, and LOCUST.
• Changes in funded and unfunded backlog.
• Whether free cash flow remains positive and improves from 2028 through 2030 after the FY27 capital expenditure peak.
• Whether the international revenue mix can continue rising from approximately 28%, as well as progress on localization and supply-chain strategies.