A Virginia-based defense contractor known for its Switchblade attack drones and, more recently, laser weapons and space hardware, saw its BlueHalo unit win a Pentagon contract worth up to $99.8 million for space systems research, according to Seeking Alpha.
Shares climbed more than 4% in the next session, the same report showed. Six months earlier, a far larger space bet from that same unit collapsed and erased more than half the company’s market value.
That contrast, not the $99.8 million figure, is the real story behind AeroVironment’s (AVAV) Sept. 14 rally. It shows how hard the company has had to work to rebuild trust with the same customer in less than a year.
AeroVironment stock’s rally still trails a deep hole
AVAV shares closed Sept. 14 at $153.40, up 4.56% from Friday, Sept. 11’s close. That still leaves the stock about 63% below its all-time high of $417.86, a level reached on Oct. 9, 2025, which also marks AVAV’s 52-week high.
The 52-week low is $135.20, meaning the stock has spent most of 2026 far closer to its floor than its ceiling. Wall Street has not given up on it.
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Among the 20 analysts tracked by StockAnalysis, the consensus rating is Buy, with an average price target of $222.82, about 45% above the Sept. 14 close.
JPMorgan raised its target to $210 from $200 after AeroVironment’s fiscal first-quarter report and maintained an Overweight rating, according to TipRanks. That report, not the Sept. 11 contract, is what actually moved the stock this month.
Revenue hit a record $480.5 million and adjusted earnings of 59 cents a share more than doubled Wall Street’s forecast, according to The Motley Fool.
Not everyone agrees that the contract drove the Sept. 14 move at all. AeroVironment shares were already up sharply before the BlueHalo award spread widely, extending a rally tied to that Sept. 9 earnings report rather than any new announcement, 24/7 Wall St noted.
If that reading holds, investors cheering BlueHalo’s Pentagon news may really be cheering a turnaround that was already underway.
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A previous space bet already backfired once
BlueHalo joined AeroVironment through a $4.1 billion all-stock acquisition that closed in May 2025, adding space, laser, and cyber warfare technology to a company built on small drones, according to GovConWire.
AeroVironment now runs two segments, Autonomous Systems and Space, Cyber and Directed Energy, with the second built almost entirely from BlueHalo’s businesses.
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The centerpiece of the BlueHalo bet was a Space Force program called SCAR, worth roughly $1.7 billion, which aimed to build a new generation of satellite-control antennas replacing the aging, Cold War-era ground stations the military relies on today, according to SpaceNews.
CEO Wahid Nawabi called SCAR “a $1 billion franchise” in the months before the collapse, according to a securities complaint filed by Levi & Korsinsky.
The Space Force issued a stop work order in January, then terminated the contract in March, forcing AeroVironment to book a $151.3 million goodwill impairment, according to SpaceNews.
Shares fell more than 17% in a single session as the SCAR story unraveled, TipRanks confirmed, and eventually declined roughly 59% from their peak. The Sept. 11 award shows the Pentagon still trusts BlueHalo with space work, just structured to fail smaller if it does.
Washington is spreading its space bets around
SCAR broke down partly because AeroVironment and the Space Force could not agree on converting it to a fixed price contract for a commercial product, according to Defense Daily.
The new Leveraged Orbital Battlespace Optimization contract is explicitly research and development, paid out through task orders rather than one locked in price, based on a contract notice reported by Defence Blog.
Only $1.7 million of the $99.8 million ceiling is funded so far, covering two initial task orders worth a combined $20.2 million, and BlueHalo was the sole bidder, despite the award being classified as competitive, the official contract record shows.
That structure spreads risk across years instead of concentrating it in one fixed commitment, which is exactly what broke down under SCAR.
President Donald Trump said this month that the country is “rapidly growing” its defense industrial base, citing space and counter-drone technology among the priorities. Nawabi told CNBC that the Pentagon and its allies are still playing catch-up on both fronts, which is why it keeps signing contracts of various sizes.
The Space Force signaled in March that it would favor multiple vendors building smaller, modular systems over single companies holding billion-dollar programs, according to SpaceNews.
For AeroVironment, and for the defense space contractors watching it, the lesson from the Sept. 11 award is not its size. It is that Washington now wants space capability delivered in pieces small enough to fail without dragging a whole program, or a stock price, down with it.
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