DroneShield Ltd. (DRO:ASX; DRSHF:OTC) has secured a US$25.3 million contract from a defense end customer in a Latin American country, reported Bell Potter Analyst Baxter Kirk in an updated research note on November 3.
Delivery and payment are expected to occur through the fourth quarter of 2025 and the first quarter of 2026, the analyst said. The order was placed by a privately owned in-country reseller, which is contractually obligated to distribute to a government defense end customer in the Latin American region.
Previously, DRO received seven separate orders from this reseller between March 2019 and July 2025, totaling approximately US$2.9 million, Kirk noted.
"We upgrade EPS +20% in CY25e reflecting a US$10 million increase in revenue following the LATAM contract award," he wrote. "We estimate that our US$210 million and US$297 million revenue forecasts in CY25/26e are 97% and 6% secured, respectively."
Drone Incursions in Europe
On November 2, 2025, drones were detected flying over the Kleine-Brogel military base in Belgium for the third consecutive night, contributing to a growing trend of drone incursions across Europe. These incidents underscore the urgent need for counter-drone technology at military bases, airports, and other critical infrastructure, which Kirk said the firm believes will accelerate the signing of European DRO contracts.
Meanwhile, the U.S. remains in a government shutdown, likely delaying the signing of U.S. contracts. Prediction markets (Kalshi) assign a 52% chance that the shutdown will extend beyond November 15, the analyst wrote.
"We believe DRO has the market leading counter-drone offering and a strengthening competitive advantage owing to its years of experience and large R&D team, focused on detect and defeat capabilities," Kirk wrote. "We expect 2026 will be an inflection point for the global counter-drone industry with countries poised to unleash a wave of spending on soft-kill detect and defeat solutions. Consequently, we believe DRO should see material contracts flowing from its US$2.5 billion potential sales pipeline over the next three to six months as defense budgets roll over to FY26."
Products Developed Primarily In-House
DroneShield Limited (DRO) is an Australian defense company specializing in counter-drone technology, the analyst wrote. DRO offers a comprehensive counter-drone solution that combines proprietary artificial intelligence software with a range of hardware products designed to detect, identify, and neutralize aerial, ground, and maritime threats.
The company's products, which are primarily developed in-house, include handheld, vehicle-mounted, and fixed installations. DRO's clientele mainly consists of military and intelligence agencies, as well as law enforcement, critical infrastructure, and commercial entities worldwide. Originally founded in the U.S. on January 10, 2014, the company soon relocated its operations to Australia, aiming to list on the ASX, which it achieved on November 4, 2015.
Investment Thesis
Kirk said Bell Potter believes DRO offers a market-leading counter-drone solution and has a growing competitive edge due to its extensive experience and large R&D team focused on detection and defeat capabilities.
"We anticipate that 2026 will be a pivotal year for the global counter-drone industry, with countries expected to significantly increase spending on soft-kill detection and defeat solutions," Kirk noted.
The firm's 12-month price target for DRO is AU$5.30. To determine the target, Bell Potter said it derived two discounted cash flow (DCF) valuations, considering both a base case and a bull case scenario, and applied a weighting to each scenario to formulate a weighted average DCF valuation.
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Disclosure: Bell Potter Securities acted as Joint Lead Manager and Underwriter of DRO's $100m capital raising in April 2024 and $120m capital raising in August 2024 and received fees for that service.
