DroneShield Ltd. (DRO:ASX; DRSHF:OTC) secured three standalone follow-on contracts for a European military customer valued at AU$61.6 million, reported Bell Potter Analyst Daniel Laing in a June 25 research note. On the news, Bell Potter updated its estimates on the counterdrone company, thereby boosting its target price 73%.
"We remain positive on the outlook for [DroneShield] and are comfortable with the current valuation based on 1) forecast earnings growth, 2) increasing scale/frequency of contracts, 3) industry tailwinds and 4) strong reratings across the defense sector," Laing wrote.
Raised Target, Buy Rating
Bell Potter increased its target price on DroneShield to AU$2.60 per share from AU$1.50, the analyst noted. At the time of Laing's report, the Australian defense manufacturer's share price was about AU$2.14. From there, the return to target is 22%.
DroneShield is a Buy. The company has a market cap of AU$1.9 billion and a 52-week range of AU$0.59–2.72 per share.
Delivery Slated for Q3/25
Laing reported that the contracts are for DroneShield to supply handheld detection and counterdrone systems. It intends to deliver this equipment throughout Q3/25, for which the company will receive payment in Q3/25 and Q4/25.
[DroneShield's] ability to rapidly fulfill a contract of this size is a key competitive advantage in the defense sector and a reflection of the company's significant inventory investment over the last 18 months," wrote Laing.
Strong 2025 Performance
Including the total of this set of contracts, DroneShield's contracted revenue already this year is AU$161M, ahead of Bell Potter's full-year 2025 estimate of AU$140M, noted the analyst.
Along with contracted revenue, DroneShield's other revenues so far in 2025 also are notable. In Q1/25 overall revenue was AU$33.5M, up 102% year over year (YOY). Software as a service revenue was AU$1.7M, up 198% YOY. Cash receipts were AU$16.7M, also up YOY, by 135%.
"We anticipate the company to deliver H1/25 revenue of about AU$70M (+206% YOY), which will exceed the entirety of 2024 revenue (AU$57.5M)," wrote Laing.
Revised Forecasts
Laing reported that Bell Potter increased its revenue estimates for DroneShield by 40% for 2025, 38% for 2026 and 36% for 2027. The firm based these uplifts on the antidrone company's year-to-date contracted revenue, its increasing contract size and frequency, and industry tailwinds, particularly governments around the world beefing up their defense budgets.
Bell Potter increased its opex forecasts on DroneShield, too, given the company continues to expanding its operations and plans to establish a European hub.
These changes to revenue and opex estimates led to increases in earnings per share of 21% for 2025, 34% for 2026 and 37% for 2027.
Support for Positive Outlook
According to Laing, Bell Potter's investment thesis on DroneShield includes:
Valuation: Its price target is a greater than 15% premium to the current share price, and the total expected return is the same.
Strong market demand: The company is well-positioned now to meet the demand, having expanded its operations and inventory.
Structural market growth: Geopolitical conflicts are causing countries to increase their defense spending significantly. Drone and antidrone defense is one of the fastest growing segments of the growing military market, DroneShield's area of expertise.
Market expansion potential: DroneShield could expand into adjacent markets, especially given its experience with artificial intelligence and machine learning technologies.
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