Bell Potter hikes price target on DroneShield
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The news: Broker Bell Potter has hiked its 12 month price target on DroneShield, lifting it from $1 to $1.60 following the company's first half results but lowered its rating on the stock.
The numbers: The 60% price target hike came despite Bell Potter noting DroneShield's revenue growth in the first half of the year came in below expectations as the drone defence company guided a stronger second half.
Bell Potter analyst Daniel Laing upgraded his revenue forecasts for 2025 and 2026 by 6% and 9% respectively, based on an "increased sales pipeline and longer-term civilian applications".
The context: However in the note — its first on the drone defence company since April — Bell Potter lowered its rating on the stock from 'buy' to 'hold', citing significant recent volatility in its share price.
The update comes after a sustained five-day selloff for DroneShield which has slashed its market cap by 42% to $1 billion. Last week Capital Brief reported that fund managers were warning the stock was grossly overvalued and that some had begun taking short positions in it.
While Bell Potter did not move its forecasts for this calendar year, it significantly raised its expectations for 2026. The broker forecasts EBITDA to hit $58.7 million and reported net profit after tax to hit $50.8 million —44% higher and 39% higher than Bell Potter's last set of forecasts.
What they said: "Our long-term view of DroneShield remains unchanged, we view the company as a market leader in the still immature counter-drone market and one who will continue to benefit from substantial tailwinds in the defence sector," Laing said.
"The company continues to be an attractive vehicle for exposure to popular investment themes, including geopolitical tensions, increasing use of drones and the rise of AI."
The source: Bell Potter research
