** 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 thelargely 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

(Lance Tupper is a Reuters market analyst. The views expressed are his own)

((lance.tupper@tr.com 1-646-279-6380))