The Electro Optic Systems Holdings Ltd (ASX: EOS) share price is catching the eye on Tuesday.
In morning trade, the defence and space company's shares are smashing the market with a stunning gain.
At the time of writing, the EOS share price is up over 36% to $4.04.
Incredibly, this means that its shares are now up over 200% since the start of May.
Image source: Getty Images
Why is the EOS share price rocketing today?
Investors have been scrambling to buy the company's shares this morning after it announced a major contract win.
According to the release, EOS revealed that it has secured an order for a drone defence capability based on a new type of high-power laser.
It notes that the new laser counter-drone capability was developed by EOS to address the urgent market need and emerging strategic requirement to defend against drone swarm attacks at an economical cost.
First in the world
The company highlights that this is the world's first export order for a 100-kilowatt class laser defence system. The order follows extensive and ongoing marketing, sales and customer demonstration activity by EOS.
All that sales and marketing activity certainly was worth it. The release confirms that the order is valued at 71.4 million euros or approximately A$125 million.
It was placed by a European NATO Member State. It requires production and delivery of the capability, as well as spare parts, training and documentation. The order will be fulfilled during 2025-2028 by EOS in Singapore.
Commenting on the technology, the company said:
EOS is already an established global leader in counter-drone capability using kinetic weapons and missiles to bring down drones. The high-power laser builds on these core competencies and substantially extends them. The EOS development program included three years of field testing and numerous firing trials of the laser in close collaboration with customers. To ensure high performance, it is supplied with algorithms, radar, threat detection, target acquisition and beam locking systems.
Is it too late to buy?
On Monday, Bell Potter put a buy rating and $3.75 price target on its shares.
But with the EOS share price now trading beyond this, it is unclear if the broker will still consider the company a buy.
Though, it is possible that this major contract win will lead to an upgrade in Bell Potter's estimates and ultimately its valuation. So, stay tuned for that in the coming days.
