DroneShield Ltd (ASX: DRO) shares had a sensational start to the week on Monday.
The counterdrone technology company's shares jumped 16% to $1.03.
Investors were scrambling to buy the company's shares following the announcement of major contract wins.
DroneShield revealed a new package of five standalone repeat contracts valued at $32.2 million, with delivery and payment expected through the second and third quarters of calendar year 2025.
This comes on top of $52 million in already contracted revenue, bringing DroneShield's 2025 delivery pipeline to at least $84 million. This is well above the $57 million in revenue recorded in 2024.
The team at Bell Potter was impressed and believes it is a sign that customer demand is re-accelerating.
As a result, the broker has increased its revenue forecasts by 21% for 2025, as well as lifted forecasts by 13% for both 2026 and 2027.
The good news is that this has also led to a sharp lift in earnings expectations, with earnings per share (EPS) forecasts jumping 68% in 2025, followed by 27% and 18% gains in the following years.
More good news for owners of DroneShield shares is that there are strong tailwinds building thanks partly to US President Donald Trump. Bell Potter said:
The EU has announced a plan to "rearm Europe" worth €800b, including a €150bn loan scheme and changes to fiscal rules that could unlock €650bn in spending. Whilst the UK has committed to a sustained increase in defence spending to reach 2.5% of GDP by 2027 (2.36% 2026), with an ambition to reach 3%.
Drones a priority in Trump defence budget: President Trump recently announced he plans to increase the US defence budget to >$1 trillion USD. Whilst the Pentagon has identified certain priority areas, including drones and counter-drone.
In light of the above, Bell Potter has retained its buy rating on DroneShield shares with an improved price target of $1.30 (from $1.10).
Based on its current share price, this implies potential upside of 26% for investors over the next 12 months. It concludes:
Current industry tailwinds and DRO's strong performance YTD gives us confidence that customer activity is increasing following a brief pause around the US election last year. As such, we have increased our revenue forecasts by 21%/13%/13% in CY25/CY26/CY27 which drives EPS upgrades of 68%/27%/18% in the same periods. We retain our BUY recommendation.
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