DroneShield Ltd (ASX: DRO) shares are on the move on Tuesday morning.
At the time of writing, the counter drone technology company's shares are up 20% to $2.76.
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Why are DroneShield shares jumping?
Investors have been scrambling to buy the company's shares this morning after it made a big announcement before the market open.
According to the release, DroneShield has received a contract valued at a total of $49.6 million from an in-region European reseller.
It notes that this European reseller is contractually required to distribute the products to a European military end-customer. However, it was not at liberty to disclose who that end-customer is.
Though, management confirmed that it does not consider the identity of the counterparty/customers to be information that a reasonable person would expect to have a material effect on the price or value of the DroneShield's securities.
In addition, it stressed that the announcement contains all material information relevant to assessing the impact of the contract on the price or value of the DroneShield's shares and is not misleading by omission.
What is the contract for?
The release notes that the $49.6 million contract is for handheld counter drone systems, associated accessories, and software updates.
The good news is that DroneShield has a large portion of this stock on-the-shelf. As a result, it expects to complete all deliveries in the first quarter of 2026.
Cash payments are also expected to be fully received during the same quarter and no additional material conditions need to be satisfied.
This isn't the first order from this reseller. DroneShield revealed that it over the past three years, it has received 15 contracts from this reseller totalling over $86.5 million. And while it likely won't be the last, there are no obligations for any additional contracts from this reseller or end-customer.
Should you invest?
The team at Bell Potter sees a lot of value in DroneShield shares at current levels.
While it hasn't responded to this news yet, it last had a buy rating and $5.30 price target on its shares. This is more than double where they currently trade. The broker said:
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 see material contracts flowing from its $2,550m potential sales pipeline over the next 3-6 months as defence budgets roll over to FY26.
