Wedbush said each company occupies a distinct position within the evolving defense ecosystem despite recent market concerns.
- Wedbush initiated coverage of both AeroVironment and Kratos with an Outperform rating.
- The firm said AeroVironment’s expansion across air, land, sea, space and cyber gives it a lasting competitive edge.
- Wedbush said Kratos is an overlooked supplier of critical defense software and components.
AeroVironment (AVAV) and Kratos Defense & Security Solutions (KTOS) stocks gained overnight after Wedbush backed both companies, citing their well-positioned status to benefit from long-term military modernization and expanding demand for advanced defense technologies.
Wedbush Sees 51% Upside For AVAV
Wedbush assigned an Outperform rating to AeroVironment with a price target of $250, implying a 51% upside potential to the stock’s last close.
The firm expressed confidence in AeroVironment, describing the company as an early leader in unmanned systems that has broadened its reach beyond aerial platforms to include land, maritime, space, and cyber capabilities.
The analyst acknowledged that AeroVironment recently faced pressure following a financial restatement, disclosure of a material weakness in internal controls and the cancellation of a U.S. Space Force contract. Even so, Wedbush believes those developments have created a more attractive valuation for investors seeking exposure to next-generation defense technology.
According to Wedbush, AeroVironment’s operational track record and battlefield-tested products provide “a durable moat new entrants cannot replicate on a relevant timeline.”
AeroVironment stock inched 0.6% higher, ahead of Wednesday.
Wedbush Praises KTOS Business Model
Wedbush began Kratos coverage with an Outperform rating and $85 price target, implying a 70% upside to the stock’s last closing price.
For Kratos, Wedbush argued that investors often underestimate the company’s strategy. Rather than competing directly with major defense contractors to build complete weapons platforms, the company supplies mission-critical software and components used by established defense firms as well as newer industry participants.
The analyst said this supplier-focused approach gives Kratos exposure across multiple defense programs, including hypersonic weapons, missile defense systems, space technologies and microelectronics. Wedbush described the company as a key infrastructure provider for the broader defense industry rather than primarily as a drone manufacturer.
Kratos Defense & Security stock edged up 0.6% overnight heading into Wednesday.
AVAV, KTOS Retail Traders View
On Stocktwits, retail sentiment around AVAV remained in ‘extremely bullish’ territory, while sentiment around KTOS remained in ‘bearish’ territory.
A user said, “The market still largely prices it[Aerovironment] as a traditional defense name, but the long-term narrative is shifting toward a broader role in autonomous systems, space connectivity, and advanced military infrastructure.”
Another user said, $KTOS I see this going to 60+ pre earning. Drone and defense are great under trump. Prorbabky waking up one day seeing news about Trump admin’s investment on it that push it beyond 100+.”
So far this year, AVAV and KTOS stocks have cratered 34% and 31%, respectively.
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