AeroVironment (AVAV) is well-positioned in industry growth markets, but its implied fiscal 2028 to 2030 revenue targets and margin ramp carry incremental risks against a backdrop of flat topline defense spending and greater investments, RBC Capital Markets said in a Thursday research report.

The company's focus markets are likely to see considerable growth, but the back-half weighted fiscal 2030 plan could witness incremental budget pressure as the pace of defense spending growth slows, starting 2028, analysts wrote.

Investors are hesitant to give the company full credit for the material margin ramp, considering risks of margin pressure from capacity expansion, higher investments, and the pace of new product launches, driven by an increasingly competitive landscape, according to the note.

The brokerage said it downgraded the stock to sector perform from outperform and cut its price target to $180 per share from $210.

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