Broker Bell Potter has initiated coverage on ASX technology stock Elsight Limited (ASX: ELS).
It has placed an attractive price target on the stock – tipping significant upside.
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Elsight overview
Elsight is a supplier of unmanned system communication modules to OEMs.
The company offers advanced communication components for unmanned systems (aerial, ground, and sea) through its flagship product, the Halo platform, which aggregates all available communication paths into one resilient, encrypted pipe for beyond visual line of sight (BVLOS) control, video, and telemetry.
At the start of the year, shares were trading at $0.38. At one point during 2025, they reached as high as $2.29 per share.
Shares closed last week at $1.26 each, which is still an impressive 230.26% higher than the start of the year.
For context, the S&P/ASX All Technology Index (ASX: XTX) is up by just over 8% in the same period.
What is Bell Potter's view?
The broker said it believes this technology stock has developed a market-leading product that is fully leveraged to the emerging use of drones in both a defence and commercial context.
In CY26e, Bell Potter expects ELS to be a beneficiary of downstream demand from global defence departments, supporting a 40% hardware sales revenue growth estimate.
The broker believes ELS shares offer value at 12.8x CY26e EV/EBIT given its recurring revenue, capital-light business model, relative valuation vs. other drone-exposed stocks, and long runway of growth.
We believe ELS has one of the most compelling unmanned system communication modules on the market, evident by its strong hardware gross margins of ~78.0%. Despite ELS' 13 patents, we believe copycat competitors may enter the market and create margin pressures offsetting the positive mix benefit as generated from higher margin cloud revenues.
It also sees potential upside to its CY26/27e forecasts if ELS can broaden its customer base with contract signings over the next 6 months.
Significant upside for this technology stock
Bell Potter has initiated coverage on this technology stock with a buy recommendation and $1.90 price target.
From last week's closing price, this indicates an upside of more than 50%.
If the stock price were to reach this target in the next 12 months, a $10,000 investment would be worth approximately $15,000.
