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Why the Droneshield (ASX:DRO) share price has rocketed higher

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The Droneshield Ltd (ASX: DRO) share price has rocketed higher today on news the company has bagged a fresh government contract.

The Droneshield share price is up 10% to 22 cents at the time of writing. This compares to the All Ordinaries Index (ASX: XAO) which is also moving higher today, up 1.4% to 6,093 points.

Let’s take a look at Droneshield.

What does Droneshield do?

Droneshield specialises drone security technology, designing and developing detection systems that protect people, organisations and critical infrastructure from drones.

Its multi-layered drone countermeasures include detection and disruption products which are much needed in the current environment.

Its key product is the DroneGun, which is a hand-held, lightweight portable weapon that is highly effective against drones.

New government contract

The global defence contractor received an order for its DroneGun Tactical hand-held counter-drone products. The customer is from a major intelligence government agency from one of the ‘Five Eyes’ countries (a signals intelligence alliance between the United States, Canada, Australia, the United Kingdom and New Zealand).

The deal is worth approximately $900,000 with delivery expected to be through Q4 2020 and Q1 2021.

What did the CEO say?

Droneshield CEO Oleg Vornik was pleased with the new order, saying:

We are excited to see continued conversion of our extensive pipeline, following the hard work in last the several years with this and other customers.

This order cements our relationship with this customer, continuing to set the DroneShield products as the go-to counterdrone solutions for key government agencies globally, in terms of further DroneGun orders, sales of complementary products such as RfPatrol MKII and our vehicle and fixed site systems, and opening the door for custom larger projects in the EW/signals intelligence domain.

Other developments

Just a few weeks ago, Droneshield advised it had won a contract with a Southeast Asian country for a DroneSentry system. The order was a first for this country and anticipated to lead to other multimillion-dollar sales. The agreement will see Droneshield awarded about $1 million before the product ships in Q4 2020.

DroneShield also received funding from the US Department of Defence for the development of its DroneShieldComplete command-and-control (C2) system. The amount invested was not disclosed, but is expected to be updated to the market when available.

Is the Droneshield share price a good investment?

The Droneshield share price has been on a recovery mission since reaching its 52-week low of 8.4 cents in March. However, it’s still a long way off its multi-year high of 46.5 cents achieved last year.

I think that Droneshield offers exciting prospects in the defence area, given the current tense geopolitical environment. I like what Droneshield brings to the market, and will be adding the company to my watchlist.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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