Ord Minnett has just lifted its 12-month price target on a S&P/ASX All Ords Index (ASX: XAO) defence share by 93%.
That share is ASX All Ords industrial stock Electro Optic Systems Holdings Ltd (ASX: EOS).
Electro Optic Systems produces advanced weapon systems, counter-drone solutions, and space domain awareness.
The broker upgraded Electro Optics Systems shares to a buy rating in a new note published yesterday.
Ord Minnet placed a new 12-month share price target of $4.25 on the stock, up 93% on the previous target.
But there's a catch…
ASX All Ords defence share up 237% in 12 months
The only problem with Ord Minnett's significant price target upgrade is that this ASX All Ords share is trading well above it.
Yesterday, the Electro Optic Systems share price closed at $5.73, down 0.17% for the day.
This ASX All Ords defence share has had a magnificent 12 months, with the stock price soaring 237%.
The ASX defence stock hit a five-year high of $6.43 last Friday amid another record high for the ASX 200.
Electro Optic Systems is directly benefiting from the global defence investment thematic.
Back in June, NATO member nations committed to raising defence spending from 2% to 5% of GDP over the next 10 years.
NATO is concerned by the long-term threat posed by Russia to Euro-Atlantic security and the ongoing threat of terrorism.
Ord Minnett's raised price target follows a major contract win for Electro Optic Systems.
Earlier this month, the company revealed that a European NATO member nation had placed a major order for a new laser counter-drone product.
The order is worth €71.4 million or approximately A$125 million.
The ASX All Ords industrial share rocketed 43% on the day of the news.
Contract win a 'company maker', says broker
Ord Minnett said the order was "a company maker" for Electro Optic Systems.
In a statement, Electro said the contract was the world's first export order of a 100-kilowatt class laser defence system.
Ord Minnett commented:
EOS estimates the non-US customer addressable market for this class of counter-drone weapon to be circa 200 units, or in excess of US$10 billion ($15 billion) over the next five years.
Given its first-mover advantage, we estimate EOS will secure an additional $1.3 billion in orders in the period to FY32.
The broker said expected gains over FY28 to FY32 justified a 93% increase in its price target for the ASX All Ords defence share.
What do other experts think?
Bell Potter also has a buy rating on this ASX All Ords defence share.
Following news of the contract, Bell Potter raised its 12-month price target by 33% from $3.75 to $5 per share.
The consensus rating among four market analysts on the Commsec trading platform is a strong buy.
Three analysts have a strong buy rating on Electro Optic Systems shares, and one has a hold rating.
