The Electro Optic Systems Holdings Ltd (ASX: EOS) share price was in fine form again on Tuesday.
The defence and space company's shares rocketed over 40% higher thanks to some big news.
This latest gain means that its shares are up over 200% since this time last year.
But if you thought the gains were over, think again. That's because Bell Potter believes this high-flying ASX share can keep climbing.
What is the broker saying?
Bell Potter was very pleased with yesterday's news of an order for a drone defence capability based on a new type of high-power laser. It said:
EOS has secured an order valued at €71.4m (approx. A$125m) from a European NATO member state for a 100kw class laser defence system. The new laser counterdrone 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. The development order will be fulfilled during CY25-28e by EOS in Singapore. This award materially derisks our revenue forecasts across this period.
The award of the world's first export 100kw HELW contract is of significant strategic importance for EOS as it: 1) validates EOS's technology and IP; 2) improves EOS value proposition in future customer negotiations, paving the way for larger order sizes; and 3) positions EOS as one of the only counter-UAS companies (excl. US) globally offering a layered defence solution across multiple kinetic defeat methods.
EOS share price tipped to rise further
In response to the above, Bell Potter has boosted its earnings estimates for the coming years and its valuation accordingly.
According to the note, the broker has retained its buy rating on its shares with an improved price target of $5.00 (from $3.75). Based on the current EOS share price of $4.23, this implies potential upside of 18% for investors.
Commenting on its buy recommendation, Bell Potter said:
The award of the HELW contract gives EOS a first mover advantage in a new counterUAS vertical and presents potential investors with a new angle to gain leverage to the emerging drone warfare thematic. We continue to anticipate material contract awards in 2H25, including Land400. We have increased the multiple we apply in our EV/EBITDA valuation to 40x and reduced the WACC to 8.2% to reflect the significance of the HELW contract as key a driver of long-term growth for EOS. Our updated PT of $5.00 is a >15% premium to the SP so we retain our BUY recommendation.
