Investing.com -- Shares of AeroVironment Inc. (NASDAQ:AVAV) climbed 9.6% following the US Government Accountability Office's (GAO) decision to deny a protest against the Department of the Army’s contract award to the company for its Switchblade dive-bombing drones.
The denial of the protest, which had been filed in September, marks a significant step for AeroVironment, enabling it to proceed with fulfilling its obligations under the potentially lucrative contract.
The stock’s ascent reflects investor relief and optimism as the GAO's ruling removes a significant uncertainty that had been looming over the company. The stock moved up 9.6% in the trading session after the news was released.
William Blair analyst Louie DiPalma noted the positive outcome for AeroVironment, stating, “This ruling reduces an overhang on the stock and clears AeroVironment to receive follow-on Switchblade-600 orders.”
The clearance to continue with the contract and potential for follow-on orders appears to have bolstered investor confidence in the company's future revenue streams.
AeroVironment has expressed its intention to meet its commitments under the contract and any delivery orders that may be issued throughout the term of the contract.
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