Further upside could be in sight for defense contractor AeroVironment amid a rise in demand, according to Baird. Analyst Peter Arment upgraded the stock to outperform, in addition to raising its price target to $128 from $95. The new price target suggests shares could rally more than 34% from Tuesday’s close. Shares jumped more than 25% in midday trading on the back of the company’s strong fiscal first-quarter results. Late Tuesday, AeroVironment posted an earnings and revenue beat, as well as a surge in order activity. AeroVironment is a “leader in small [unmanned air system] UAS contracts,” Arment wrote in a Wednesday note. He noted the U.S. Army is set to award a new multiyear contract for AeroVironment’s small UAS systems, which will support a broad range of the company’s product base. The analyst added that “record backlog levels [are] the new normal” likely well into the mid-decade. The company saw its funded backlog rise 27% sequentially in the prior quarter, Arment noted. “Weapons assistance to Ukraine is fueling support for near-term needs, plus forcing allies to reassess requirements especially in the loitering munition category,” the analyst said. The company’s sales to international governments have doubled since 2017, he added, which could continue to grow materially. Shares are up nearly 40% year to date. — CNBC’s Michael Bloom contributed to this report.