Drone Company Launches Defense System as Global Tensions Rise

DroneShield Ltd. (DRO:ASX; DRSHF:OTC) has announced that it has launched an initial order from a defense customer for its target area-specific Satellite Denial Systems. Global Navigation Systems (GNSS) are used around the world, while the most well-known are the American GPS, the Russian GLONASS, the European Galileo, and the Chinese BeiDou systems.

DroneShield has used GNSS denial against drones and UAVs for a number of years as part of the smart defeat capability within its products. The company has developed a number of unique techniques during that time and has a growing reputation as experts in this domain. DroneShield systems work on focusing the disruption on a specific targeted area.

A Five Eyes government has requested that DroneShield develop this capability a step further through a paid R&D project. This project is expected to follow up with a series of further projects, each project including more advanced development of the system. The dollar value is not material for the initial project, but it is an area of expansion that is likely to become material in the next 24 months.

According to Technical Analyst Clive Maund, DroneShield is a good Buy for investors.

According to Oleg Vornik, CEO of DroneShield, "DroneShield has proven a successful ability to rapidly innovate and deliver on defense R&D contracts, as recently demonstrated in our Electronic Warfare domain efforts, where the company has progressed from the initial $600k project, to $3.8 million, to $9.9 million, all within a 3-year period."

He went on to say that "Both Electronic Warfare and Satellite Denial represent closely adjacent areas to our core C-UAS space, with the learnings able to be channeled into our C-UAS work, in addition to the contracts on their own representing value for the business."

High Demand for Drones

The market is good for drones and UAVs. The United States has announced that it has pledged to buy US $1.3 billion of military aid for Ukraine to use in its conflict with Russia.

According to US News, the package will include air defenses, counter-drone systems, and drones. The United States will, rather than use its own weapons reserves, buy from the defense industry, representing an opportunity for companies like DroneShield.

Dynamic Movement and Strong Upside Momentum

According to Technical Analyst Clive Maund, DroneShield is a good Buy for investors. He said of the company, "The fact that the stock has been behaving like a young dynamic stock in recent days implies that something big is in the offing, so the current strong upside momentum looks set to continue and may even accelerate. The business environment for the company has been completely transformed over the past year or two . . .  the resulting big demand for drones and related paraphernalia looks set to continue to grow rapidly." 

A Bell Potter report noted that the company's contracted order backlog and sales pipeline are encouraging.

Analyst Daniel Laing noted in a July report that "We remain bullish on the outlook for DroneShield, with this update pointing to a strong H1/23 setting up the foundation for a record year." Bell Potter has not changed their target price from AU$0.45 for DroneShield. The company's current price is AU$0.315 per share, implying a return of 44% for investors.

Ownership and Share Structure

Management and insiders own 5.16% of the company. Charles Goode owns 3.66% with 21.50 million shares, Carla Balanco owns 1.44% with 8.45 million shares, Angus Bean owns 1.26% with 7.39 million shares, Paul Jonathan Shaw owns 0.95% with 5.58 million shares, Oleg Vornik owns 0.86% with 5.03 million shares, and Peter James owns 0.65% with 3.82 million shares.

Institutions own 8.31% of the company. Epirus Inc owns 3.15% with 18.50 million shares, SR Bennett Pty. Ltd. owns 0.91% with 5.35 million shares, and P & B Shaw FT CB Pty. Ltd. owns 0.59% of the company with 3.43 million shares.

There are 586.9 million outstanding shares, with 496.03 million free float traded shares. The company has a market cap of CA$124.98 million. It trades in the 52 week period between CA$0.16 and CA$0.42.

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of DroneShield Ltd.
2. Amanda Duvall rote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
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