Given how volatile DroneShield Ltd (ASX: DRO) shares have been in 2025, it is easy to forget that they are actually smashing the market.
In fact, based on yesterday's close price of $3.00, the counter drone technology company's shares are up exactly 300% since the start of the year.
Sure, they are still more than 50% lower than their 52-week high, but if you asked shareholders if they would take a 300% annual gain back on 1 January, I think each one would take it.
But what about 2026? Can this high-flying stock continue its ascent over the next 12 months? Let's find out.
Image source: Getty Images
Can DroneShield shares continue to rise in 2026?
The good news is that analysts at Bell Potter believe that there is still plenty more gas left in DroneShield's tank.
This is due to its exposure to increasing demand for counter-UAS technologies across the world and particularly in Europe.
In response to last week's $50 million order from a European military end-customer, Bell Potter said:
This repeat order represents the company's second largest contract in its history and highlights the urgent need for counter-UAS technologies in Europe. Following this announcement, we estimate that our CY26e Hardware revenue forecast (excl. subscription) of $271m is 24% secured by announced contracts, noting DRO typically delivers product faster than traditional defence contractors.
And while Bell Potter concedes that a potential Russia-Ukraine peace deal could hit sentiment, it doesn't believe it will lessen demand for its products. It adds:
We expect a Ukraine peace deal would weigh negatively on share price sentiment in the short term but would likely see no change to our forecasts given current global defence spending rhetoric.
Shares tipped to rise
According to the note, the broker has put a buy rating and $4.40 price target on DroneShield's shares.
Based on its current share price of $3.00, this suggests that they could rise a further 47% between now and the end of December 2026. That's not bad considering their incredible rise this year.
Commenting on its recommendation, Bell Potter concludes:
We believe DRO has a market leading RF detect/defeat C-UAS offering and a strengthening competitive advantage owing to its years of battlefield experience and large and focused R&D team. We expect 2026 will be an inflection point for the global counter-drone industry with countries poised to unleash a wave of spending on RF detect and defeat solutions. Consequently, we believe DRO should see material contracts flowing from its $2.5b potential sales pipeline over the next 3-6 months as defence budgets roll over to FY26e.
