RBC Capital downgrades AeroVironment to Sector Perform, cuts target to $180

President Trump imposed new tariffs on foreign drone imports, benefiting U.S. manufacturers AeroVironment (AVAV), Kratos (KTOS), and Red Cat (RCAT). Tariffs range from 25% to 100%, with some delayed until 2027. The policy aims to reduce U.S. dependence on foreign drone supply chains and incentivize domestic manufacturing. Institutional positioning varies, with AeroVironment seeing declines, while Kratos and Red Cat gain investor interest.

Trump administration signed a proclamation imposing tariffs on imported unmanned aircraft systems and components, including 100% on drones over 25kg or with sensitive national security capabilities, 25% on smaller drones, and additional rates for allied countries. White House says foreign supply chains pose security and safety risks. Premarket shares rose for KTOS, AVAV, ONDS, and RCAT.

The U.S. Army is in active negotiations with AeroVironment over the Enduring High-Energy Laser (E-HEL), a move from testing to a program of record for counter-drone directed-energy systems. Reporting says the Army may buy up to 20 systems for about $400 million to $500 million. The deal centers on AeroVironment’s LOCUST X3, paired with RF detection and jamming.

AeroVironment (AVAV) shares rose more than 8% after Bloomberg reported the U.S. Army plans to award at least a $400 million production contract for its Locust counter-drone laser system. The deal would be the Pentagon’s first directed-energy counter-drone production beyond prototypes, supplying dozens of systems, according to the report.

After the White House announced new tariffs on imported unmanned aircraft systems and components, drone makers and suppliers’ shares rose on Friday. Reported moves include Unusual Machines up as much as 28%, Red Cat Holdings up 15%, AeroVironment up about 10%, and Kratos up 6.9%. Tariffs take effect in 21 days, with some component duties delayed 180 days, according to the White House.

Midday movers included Cisco (shares down 2% after HSBC cut its rating to Hold and price target to $120), Applied Materials (down 5% after Q2 adjusted EPS $3.50 on $9.12B revenue), Reddit (up 12% on S&P 500 inclusion Aug. 18), and Sandisk (up 6% after JPMorgan upgraded to Overweight). Other moves cited upgrades, tariffs, and guidance changes.