Droneshield shares fall as Bell Potter downgrades to 'hold'

The news: Shares in anti-drone technology company Droneshield entered a second day of declines after Bell Potter analysts downgraded their position on the stock from ‘buy’ to ‘hold’.

The numbers: Droneshield shares had slipped 5.1% to $3.33 at 11:10am AEST. Although Bell Potter analysts downgraded their position on the stock, they lifted its 12-month target price from $2.50 to $3.80.

Droneshield shares are still up 344% in the year to date.

The context: In a research note, the Bell Potter analysts said they remain bullish on the anti-drone sector and view Droneshield as a market leader but the downside risk is "prevalent at current valuation".

Based on recent contract wins and plans to invest $13 million in a new Sydney manufacturing and research and development facility, the Bell Potter analysts increased their long-term revenue forecasts and increased operating expenses as Droneshield "continues to rapidly scale its operations quicker than we anticipated".