AeroVironment makes sharp U-turn after Raymond James downgrades to 'underperform'

Drone firm AeroVironment's AVAV.O shares reverse course sharply and last down 19.1% at $204.11 in afternoon trading on Mon after Raymond James downgrades to 'underperform' from 'strong buy'

AVAV shares soared as much as 20.1% to $303 earlier in the session as Iran conflict intensified, causing strife in the Middle East

Raymond James analyst team led by Brian Gesuale points to AVAV's potential loss of exclusivity on $1.4 bln contract with U.S. Space Force's Satellite Communications Augmentation Resource (SCAR) program

AVAV, which had $2.8 bln of total backlog, could see $1-$1.4 bln of backlog erased, which adds uncertainty to its forward estimates, Raymond James says

"Core backlog appears to be in a non growing/contracting state over the next few quarters as competition, moderating order volumes, and accelerating revenue recognition impede the
largely upward trajectory over the past 18 months," Raymond James wrote in note

Research action comes after the U.S. government in Jan issued a stop work order on SCAR, allowing both parties to negotiate an amended agreement

Avg rating of 18 brokerages on AVAV is "buy"; median PT $390.50, per LSEG data

With move on Mon, stock down 15% YTD and off ~51% from its record intraday high of $417.86 hit in Oct