AeroVironment enters the home stretch before its June 25 Q3 results with a striking divergence: options traders are the most bullish they have been in the past year, while short sellers — though still heavily positioned — are quietly trimming.
The options market has flipped decisively toward calls. The put/call ratio has fallen to 0.51, roughly two standard deviations below its 20-day average of 0.65, the most call-heavy reading the contract has seen in at least 52 weeks against a low of 0.45. A week ago the ratio was 0.52 and a month ago it was near 0.68. The direction of travel is unambiguous: demand for upside exposure has been accelerating since mid-April, right as the stock started recovering from its post-earnings lows. The borrow market supports a relaxed atmosphere for bulls — cost to borrow is just 0.48%, barely changed over the month, and borrow availability is not under pressure. Availability has actually eased slightly this week as shorts pulled back, consistent with the overall repositioning.
Short interest remains material but the trend is softening at the margin. SI as a percentage of the free float is 11.6% — elevated versus the broader market but down from a peak near 12.7% in mid-April. The month-on-month headline still shows a 14% increase in shares short, reflecting the sharp jump after the March 11 earnings print, when shorts aggressively rebuilt positions. That wave now appears to have crested. Days to cover of 7.2 means unwinding would take time, and the ORTEX short score of 63.2 keeps AVAV in the top quartile of short interest intensity across the US market. The score has also edged lower across the past week, from 64.4 to 63.2, another signal that the acute pressure phase is fading.
The Street is bullish in aggregate but has spent the past two months resetting price targets lower. Following the March 11 earnings miss — the stock fell 8.6% on the day — virtually every covering analyst maintained their positive rating while cutting targets. Jefferies held Buy but trimmed to $305 from $390. BTIG maintained Buy at $330, down from $415. Stifel kept Buy at $315 from $389. The pattern is clear: conviction on the long-term story remains, but near-term estimates are being walked down after the SCAR program setback. Mean price target now stands around $310, against a current price of $168.86 — implying over 80% upside. That gap reflects how far the stock has fallen (down 31% year-to-date) rather than sudden analyst optimism. The PE multiple has compressed by over 23 points across the past 30 days, landing at 37x, and EV/EBITDA has also contracted, falling roughly 6.5x over the same period. Bulls point to strong organic revenue growth and the BlueHalo integration strengthening counter-drone and space capabilities. Bears flag high debt levels, near-term revenue headwinds, and dependence on federal budget cycles at a time of unusual defence spending uncertainty.
Institutional ownership adds a layer of interest. BlackRock added 858,000 shares in the latest reporting period, lifting its stake to 11.2% of shares outstanding. State Street bought 281,000 shares, and Invesco added 239,000. These are meaningful incremental moves into a stock that has been under pressure. Insiders, by contrast, have been consistent sellers — the CFO, chief accounting officer, and an independent director all sold during Q1 and early Q2, at prices ranging from $197 to $377. The trades are small in absolute terms (all under $400,000 each) and carry low significance scores, consistent with routine plan-driven sales rather than a directional view.
The last two earnings prints produced one-day drops of 8.6% and 4.4% respectively. With Q3 results due June 25, analysts priced in a "record quarter" narrative before March only to see the miss. RSI at 38 keeps the stock in mild oversold territory, and the EPS momentum factor scores rank in the 97th percentile on a 30-day basis and 88th on 90 days — meaning forward estimates are rising despite the step-down. The June print becomes a referendum on whether the post-BlueHalo integration thesis is translating into numbers that justify the current discount.
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