RBC says stop work order likely headwind to revenue timing for AeroVironment

RBC Capital notes that a protest has been filed with the U.S. GAO against AeroVironment’s recent $990M Army IDIQ award. The protest challenges the U.S. Department of the Army’s decision made on August 27 for AeroVironment’s sole-source IDIQ contract associated with the company’s Switchblade systems. The U.S. Army has issued a stop work order on the contract while the protest is being considered by the GAO, although this stop work order does not impact any of AeroVironment’s other contracts, the firm adds. The company expects that the GAO will issue a decision on the protest no later than December 16th, 2024. Although RBC views the stop work order as a likely headwind to revenue timing, it believes AeroVironment has a strong rationale for winning the protest. The firm has an Outperform rating on the shares with a price target of $215.