AeroVironment (NASDAQ:AVAV) late Tuesday was upgraded to Buy from a previous investment rating of Hold by analysts at financial-services firm Jefferies. They said the maker of military drones is poised for gains following its planned acquisition of defense-technology company BlueHalo.

“We like the acquisition of BlueHalo as it rounds out AeroVironment’s (AVAV) portfolio, diversifying the biz across attractive defense technology markets through a portfolio of in-service, profitable products,” Greg Konrad, analyst at Jefferies, said in a November 19 report.

AeroVironment's (AVAV) planned acquisition of BlueHalo in an all-stock deal with an enterprise value of about $4.1 billion is expected to close in the first half of 2025. BlueHalo focuses on space technologies, electronic warfare and artificial intelligence, among other areas.

Jefferies lowered its price target on AeroVironment (AVAV) to $230 a share from $240 a share, based on an estimated enterprise value that’s 28 times earnings before interest, taxes, depreciation and amortization for 2027.

“As the only pure-play Department of Defense robotics company, AeroVironment (AVAV) provides exposure to key spending trends around munitions and persistent intelligence, surveillance and reconnaissance (ISR), which has been furthered by investments in autonomy and artificial intelligence/machine learning,” according to Jefferies.