Electro Optic Systems Holdings Ltd (ASX: EOS) shares have been on an incredible run this year.
Since the start of 2025, the ASX tech stock has risen over 600%.
This has been driven by strong revenue growth, big contract wins, and favourable tailwinds in the defence industry.
But if you thought it was too late to invest, think again.
That's because the team at Bell Potter has increased its valuation for the defence and space company yet again.
Image source: Getty Images
What is the broker saying about this ASX tech stock?
Bell Potter notes that the European Union has spoken about making a huge drone defence system and feels this could be good news for Electro Optic Systems. It explains:
EU Defence Commissioner Andrius Kubilius says the bloc will build a "drone wall" along the eastern flank, integrating detection, tracking and interception to counter hostile UAVs. After recent airspace violations, EU defence ministers agreed to move from "discussion to concrete action", with a shared drone-detection network targeted within about a year, followed by deeper layers over time. Further details are expected at early-October EU meetings in Copenhagen and Brussels.
Outside this, the broker notes that the ASX tech stock has released a sales update this week. And while its revenue was lower than expected due to delays, it highlights that its contract backlog is significant. It adds:
EOS has provided CY25e revenue guidance of $115-125m, lower than BPe of $166m and an updated contract backlog of $299m as of 29 September 2025. The weaker than expected guidance reflects delayed signing of orders from the previously expected 3Q25 signing out to 4Q25 or 2026 and hence pushing revenue into 2026. EOS has identified an additional $25m of revenue which may fall into 2025 if orders are signed in sufficient time to enable delivery in 2025. In addition, EOS disclosed a new ~$20m "advanced opportunity" to sell RWS to a European customer to be delivered within the next 6 months.
Buy rating reaffirmed
The note reveals that Bell Potter has reaffirmed its buy rating on EOS shares with a vastly improved price target of $11.00 (from $5.70). This would be a record high if it reached it.
Based on its current share price of $9.45, this implies potential upside of approximately 16.5% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
EOS is positioned as a market leader in counter-UAS solutions, in particular directed energy, and is fully leveraged to increases in defence budgets globally magnified by higher spending allocations to counter-drone technology. The EU "drone wall" is one such example underscoring the critical need for counter-UAS. We see positive news flow over the next 6 months stemming from counter-UAS and RWS contract awards.
