The DroneShield Ltd (ASX: DRO) share price outperformed the broader market in 2024 and is up 220% this year to date.
But it hasn't been smooth sailing. Shares in the counter-drone technology company closed the session on Tuesday at $1.185 apiece, having slipped 10% in the past week alone.
Experts say there are strong reasons to believe the DroneShield share price could climb further. But it's not without risks.
Let's break down the bull case for the ASX stock.
Contract wins driving revenue growth
DroneShield has secured major contracts this year, especially from government customers.
Recently, it announced a repeat order worth $3.1 million from a United States Government customer for its counter-drone systems.
The company expects to deliver these products this month, with payment due in the December quarter.
These contract wins show the rising demand for DroneShield's products in a world increasingly focused on drone-related security.
Bell Potter remains bullish on the DroneShield share price. In a recent note, it mentioned the company's "numerous near-term sales opportunities", including those with global militaries.
The broker forecasts an 80% revenue increase to a 100% increase in net profit this year.
By 2025, it expects a 33% revenue jump and nearly 50% growth in net profits, forecasting $27 million at the bottom line.
DroneShield also entered the second half of this year with a $32 million contracted backlog and a $1.1 billion sales pipeline.
This pipeline includes 33 projects valued at more than $5 million each, with the largest worth $213 million.
It also falls in line with the company's market capitalisation at the time of writing.
Growing demand for drone defences
The use of drones in modern warfare is increasing. Governments worldwide are seeking counter-drone technology to protect their assets. This could impact the DroneShield share price.
Grand View Research estimated the global anti-drone market value at US$1.9 billion in 2023.
It is expected to grow at a compounding annual rate of more than 27% between 2024 and 2030, nearly 10 times the rate of long-term gross domestic product (GDP).
It says the increase in situations "involving drones breaching security in critical areas such as airports, government buildings, and public events" are the key tailwinds driving counter-drone demand.
DroneShield's technology is being recruited within these scenarios and more by various global militaries.
CEO Oleg Vornik recently noted that global conflicts were "demonstrating the role of drones in modern warfare".
They are also "driving procurement programs of government customers around the world". This is certainly true for the company.
These kinds of tailwinds could impact the DroneShield share price if the company continues to secure additional business contracts.
According to CommSec, the stock is rated a buy from consensus.
DroneShield share price takeaway
The DroneShield share price has been volatile, but the long-term potential outlook of the market could be favourable.
The bull case for DroneShield lies in continued demand for its services and its ability to convert on this by booking more contracts. It is up a hefty 301% in the last 12 months.
