DroneShield Ltd (ASX: DRO) shares could be heading even higher over the next 12 months.
That's the view of analysts at Bell Potter, which are feeling very bullish about this high-flying stock.
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What is the broker saying?
Bell Potter was impressed with the company's performance during the third quarter, highlighting that its revenue was even stronger than it was expecting. It said:
DRO reported record revenue of $92.9m in 3Q25 stronger than we expected and up 750% YoY up from $7.8m in 3Q24. DRO stated that the current fixed cash cost of the business is approx. $100m/year. The company reported a strong cash flow result with cash receipts of $77.4m in 3Q25 and operating cash inflow after capitalised R&D of $15.5m in 3Q25 which compares to an outflow of -$19.4m in 3Q24. Investing cash outflow of -$9.9m in 3Q25 includes to $4.6m of capitalised development. Inventory of $82m remains in line with end of 2Q25. The company reported a cash balance of $212.8m at 30-Sep-25.
Another positive from the update was its growing sales pipeline, which now stands at over $2.5 billion. It adds:
DRO reported YTD committed revenue of $193.1m for delivery in 2025 implying $27.8m secured for 4Q25. DRO has a reported $2,550m pipeline, up from $2,340m in August 2025, which relates to currently visible opportunities in 2025 and 2026.
DroneShield shares tipped to keep rising
In response to the update, Bell Potter has retained its buy rating on DroneShield's shares with an improved price target of $5.30 (from $3.70).
Based on its current share price of $4.47, this implies potential upside of almost 19% for investors over the next 12 months.
Bell Potter's buy recommendation is based largely on the company's exposure to a booming market and its belief that it is well-placed to convert a good portion of its sales pipeline. It concludes:
We believe DRO has the market leading counter-drone offering and a strengthening competitive advantage owing to its years of experience and large R&D team, focused on detect and defeat capabilities. We expect 2026 will be an inflection point for the global counter-drone industry with countries poised to unleash a wave of spending on soft-kill detect and defeat solutions. Consequently, we believe DRO should win a material portion of its $2,550m potential sales pipeline over the next 3-6 months as defence budgets roll over to FY26.
