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G'day Fools. If you're like us, you're dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we'll do our best to continue to serve you, while also hoping for a swift and peaceful end to war in Ukraine.
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The Ukraine crisis is impacting economic markets around the world, but analysts believe one particular ASX defence share could gain ground.
This share fell 21% from $2.31 at market close on 2 February to $1.82 at the end of trading on 2 March.
So which Australian defence company are analysts shining a bright light on?
Which ASX defence share?
ASX defence share Electro Optic Systems Holdings Ltd (ASX: EOS) could benefit from escalating geopolitical tensions, according to a report on NAB trade. It says the situation could lead to new defence contracts for the company.
The defence, space, and communication technology company's shares are currently swapping hands at $1.745, a 4.12% fall so far today. In contrast, the S&P/ASX 200 Index (ASX: XJO) is up 0.75% today.
Citi has placed a "neutral" rating on the company's share with a price target of $2.23. That is almost 26% more than the share price at the time of writing.
Brokers can see an upside from the redesigning of Spacelink. As Motley Fool Australia reported this week, Electro Optic invested $37 million in Spacelink during FY21 to accelerate engineering and business development.
However, Citi is "waiting for the company to replenish its declining backlog and win material contracts" to turn more positive on the stock.
Electro Optic reported a net loss of $16.8 million in its full-year results on Monday, a 33.2% improvement on the loss in FY20.
The company said it is "well-positioned to support allies currently under intense national security pressure".
Electro Optic share price summary
The Electro Optic share price has sunk 66% in the past 12 months, while it has lost around 25% year to date.
The company's shares have shed 11% of their value over the past week.
For perspective, the benchmark ASX 200 index has returned around 5% over the past year.
The company has a market capitalisation of about $266 million.
