DroneShield Ltd. (DRO:ASX; DRSHF:OTC) had another record year in 2022, primarily attributed to a strong fourth quarter, reported Bell Potter analyst Daniel Laing in a Jan. 31 research note. Based on these results, Bell Potter updated its model on the anti-drone solutions firm, and this resulted in a 24% higher target price.
"With a record order backlog of AU$19 million ($19M) in cash receipts, a proven ability to win AU$10M-plus contracts, and a sales pipeline of AU$200M-plus, we believe DroneShield is now in a position to develop into a major global player," Laing wrote.
Bell Potter's revised price target on the Australian company is AU$0.42 per share, up from AU$0.34. Its current share price, in comparison, is about AU$0.36. DroneShield remains a recommended Buy.
FY22 Revenue Up 59%
Laing highlighted some of DroneShield's recent financial figures:
In Q4/22, DroneShield landed four new contracts amounting to AU$14.7M and likely recorded up to 60% of that revenue, Laing wrote. This drove the 59% increase in full-year 2022 (FY22) revenue (unaudited), which totaled AU$16.9M.
Also, during Q4/22, DroneShield's operating cash flow loss improved significantly, wrote Laing. It was -AU$0.3M versus -AU$0.8M in the previous quarter.
DroneShield ended FY22 with AU$10.3M in cash. By the end of January 2023, that amount had increased to AU$14.1M.
Revised Revenue Estimates
Laing also reported that Bell Potter increased its revenue forecasts for DroneShield for the years 2022, 2023, and 2024. The revised estimate for 2022 is AU$16.9M, reflecting a 6% boost and in line with DroneShield's reported revenue.
Bell Potter's revised estimates for 2023 and 2024 are based on DroneShield's contract backlog and near-term sales pipeline, noted Laing. The new forecasts are AU$30.5M for 2023, 15% higher than the previous estimate, and AU$44.6M for 2024, 18% higher.
"We still expect the company to record positive net operating profit after tax in FY23, accounting for receipt of the government research and development tax incentive grant," Laing added.
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Disclosures:
1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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