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Send In The Drones

Mar. 08, 2018 8:18 AM ETAeroVironment, Inc. (AVAV), IVES1 Comment
Roger Gaebel profile picture
Roger Gaebel


  • Growth of military drone fleets continues.
  • Volatile AeroVironment is a key player.
  • Competition will only get tougher.
  • Better to spread your bets when investing in drones.


Turn on the news and chances are you’ll hear about a drone strike on bad guys in Pakistan or Yemen. What you probably won’t hear about are the more mundane missions drone operators are performing to gather intelligence about those and other bad guys.

Military drones range in size from the .6 oz BLACK HORNET manufactured by FLIR Systems (FLIR) to the 14,000 lb. Global Hawk from Northrop Grumman (NOC). In addition to size, drones can be categorized as strategic or tactical and armed or unarmed with the latter outfitted with sensors for conducting intelligence, surveillance and reconnaissance (ISR).

AeroVironment (NASDAQ:AVAV) is the leading manufacturer and provider of support services for a niche market of ISR drones used by tactical military units (consisting of roughly between 40 to 100 personnel). In addition to FLIR, other companies with products in this space include the unmanned segment of publicly held Textron (TXT) and a growing number of privately-held firms that include Aeryon Labs, Physical Sciences and InstantEye Robotics.

The drones are equipped with electro-optical and infrared cameras that transmit images and full motion video back to unit commanders. Some are also equipped with additional communication packages or light sources that identify targets for strike by other platforms carrying laser-guided munitions.

Industry And Dominant players

The CIA began using drones during the 1990s' conflict in the former Yugoslavia. The military ramped up their acquisition and use of drones following the September 11th terrorist attacks. By 2015, the military drone market reached about $6B. Estimates for future compound annual growth rates vary widely from 20% (2015-2021) to 8% (2016-2021) and 4.89%(2016-2026) so as to make the estimates seem like wild guesses.

AeroVironment manufactures the RAVEN, WASP IV PUMA AE ISR drones used by the US military services, Australia, NATO and Middle East militaries. These systems have varying

This article was written by

Roger Gaebel profile picture
Former Fortune 500 company project  & finance manager and business developer. Retired US military officer with experience in Mid East and SE Asia political-military affairs.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (1)

Nathan Phillips, MBA, PMP, Ph.D Student profile picture
Adoption of UAS:
-First the military.
-Then law enforcement/emergency response.
-Finally, commercial companies.*

Commerce will require comprehensive regulation and 5G telecommuications to be implemented before adoption en masse. Look for the explosion here between 2020-2025. Note that drones will basically become commoditized Internet of Things devices, where the big data they gather will be prize.
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