Surely DroneShield shares can't just keep rising?

The gains continue for this counter-drone player.

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DroneShield Ltd (ASX: DRO) shares have been on a tear in 2024, soaring more than 316% into the green since January.

The counter-drone technology company's stock hit an all-time closing high of $1.54 per share on Tuesday.

Investors continue to bid up DroneShield shares after a string of positive updates, which have many experts bullish. Let's take a closer look.

Why DroneShield shares keep soaring

The driving force behind DroneShield's stellar performance is arguably the company's cutting-edge drone detection and disablement technology. This technology has attracted significant global demand from militaries, governments, and critical infrastructure sectors around the world.

And the growth numbers speak for themselves. In the first quarter of FY 2024, DroneShield reported a 900% year-over-year in revenue to $16.4 million. This meteoric growth has not gone unnoticed by investors, who have been eagerly buying up shares since that date.

Another significant milestone was the NATO Support and Procurement Agency (NSPA) approving the first counter-small UAS (CUAS) procurement framework agreement in the organisation's history. According to my colleague James, CEO Oleg Vornik said this was one of the "most strategically" important events since the company was founded.

Additionally, DroneShield secured a major repeat order from a US Government customer worth $5.7 million for its Counter-UxS systems. In my opinion, this contract win underscores the growing recognition and demand for DroneShield's products.

Frazis Capital believes these defence contracts underline the potential growth of DroneShield shares as well. According to my Foolish colleague Bernd, the fund notes most of its FY 2024 revenue forecasts are from "high margin" defence contracts.

In addition, investor sentiment towards DroneShield shares remains highly positive. The company's recent successful capital raises are good evidence of this.

In April, DroneShield completed an oversubscribed share purchase plan, raising $15 million from investors despite receiving $40 million worth of applications for the offer. In another share placement, the company raised $30 million by selling 37.9 million shares at 80 cents each.

What's next for the company?

DroneShield's growth prospects look fairly robust, with analysts projecting continued revenue increases.

Bell Potter recently rated DroneShield shares a buy, forecasting $97 million in sales and $24.4 million in earnings for FY 2024. According to CommSec, the stock is also rated a strong buy.

CEO Vornik has a bullish scenario that suggests DroneShield could grow sales to $500 million per annum within five years, driven by rising demand for counter-drone technology in both public and private sectors.

This is a 9x increase on FY 2023 revenues of $55 million if it were to occur.

Foolish takeaway

DroneShield shares have caught a strong bid in the last 12 months, driven by its technology and strategic contract wins. That has seen the company's share price climb a massive 571% during that time.

And experts project further gains, given the company's expanding market and revenue projections.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. 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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