DroneShield Ltd (ASX: DRO) shares are sliding today.
Shares in the All Ordinaries Index (ASX: XAO) drone defence company closed up 2.9% yesterday at $1.26 each. In late morning trade on Wednesday, shares are swapping hands for $1.235 apiece, down 2.0%.
That sees the stock down 15.7% since closing at $1.465 on 2 September.
As you can see on the chart above, DroneShield shares are down some 53% since the all-time highs posted on 15 July. That sell-off was spurred by speculation that the share price had soared too high too quickly, raising valuation concerns.
Despite the fall from its highs and the 16% retrace over the past three weeks, shares in the ASX drone defence company remain up 341% since this time last year.
Which brings us back to our headline question, is now a good time to buy?
Image source: Getty Images
Buy the dip on DroneShield shares?
If you're buying DroneShield shares, you should be prepared for likely ongoing volatility. You should also be prepared to potentially watch the stock fall further from current levels.
With that said, I believe the medium and long-term growth outlook for DroneShield shares remains strong. So strong, in my opinion, that while I agree with the buy rating Bell Potter has on the stock, I believe the broker's $1.35 12-month price target is conservative.
At its half year results, the company reported record revenue of $24.1 million, up 110% year on year. And following on its successful capital raise, the company had a cash balance of $230 million as at 30 June.
Looking ahead, DroneShield kicked off the second half of the calendar year with a $32 million contracted backlog and an impressive $1.1 billion sales pipeline.
And, while we may all fervently wish for world peace, much of the globe is unfortunately marching in the other direction.
Hostile drone attacks in the Russian-Ukraine war and in the rising Middle East conflict are a daily occurrence. And global military spending is surging, opening the door to potentially further defence contracts for DroneShield.
Indeed, as the company stated recently:
The conflicts in Ukraine, Middle East and elsewhere globally are demonstrating the role of drones in modern warfare and driving procurement programs of government customers around the world seeking to be prepared for the next conflict.
New management to help lead the charge
In another encouraging sign for DroneShield shares, the company announced the appointment of two new non-executive directors this morning.
Richard Joffe has a successful track record in the US of founding and building technology-based companies across a range of industries.
Simone Haslinger has 20 years of investment banking experience, most recently as co-head of Equity Capital Markets Australia for JP Morgan.
Commenting on the appointments that could drive further growth for DroneShield shares, independent non-executive chairman Peter James said:
As DroneShield continues to significantly scale in size and maturity, we welcome Richard and Simone to the board, with their unique and extensive experiences complementing the existing board skillset.
DroneShield will continue to augment its military and specialist skillsets and experience via advisory board and consulting positions.
