DroneShield shares rocket as Bell Potter upgrades to 'buy'
Make us a preferred source
Make us a preferred source on Google
The news: DroneShield shares surged in morning trade after Bell Potter upgraded its rating on the counter-drone technology company, which announced a surging increase in quarterly revenue on Wednesday.
The numbers: Shares were up 11.8% to $3.55 at midday AEST, adding to gains of 7.1% in the previous session, and taking returns to more than 360% since the turn of the year.
Bell Potter upgraded the stock from 'hold' to 'buy' and left its 12-month target price unchanged at $3.80.
Bell Potter downgraded DroneShield to 'hold' less than two weeks ago.
The context: Bell Potter analysts Daniel Laing and Baxter Kirk said that while DroneShield's record quarterly revenue was largely in line with market estimates, the company's first-half operating cash outflow of $4.4 million comfortably beat their forecasts of $25.5 million. DroneShield's investing cash outflow of $11.9 million also beat Bell Potter's estimate of $16.7 million.
The analysts noted the better-than-expected cash flow result was driven by higher customer receipts and lower inventory than forecast.
What they said: "DroneShield's strong first-half results, high-level of contracted revenue and recent share price pull-back provides us with increased confidence in its near-term outlook and, in our view, a more attractive entry point," the analysts said.
"Our unchanged price target of $3.80 is a >15% premium to the current share price so we upgrade our recommendation to 'buy'."
The source: Bell Potter research
