Shares in Electro Optic Systems Holdings Ltd (ASX: EOS) have delivered one of the strongest performances on the ASX over the past year. In fact, the stock ranked 4th for share price growth within the S&P/ASX 300 Index (ASX: XKO).
The defence technology company's shares surged 668% in 2025, closing last week at $9.95, just below record highs. So, is it too late to buy?
Based on what's building inside the business, I don't think it is.
Here's why I believe EOS shares could reach $15 in 2026.
This is no longer a speculative story
A year ago, EOS was still seen by many as a high-risk defence technology play.
Today, the company now has a large and growing contract book, established customers, and improving cash flow. The focus has shifted from future potential to executing signed contracts.
As at late 2025, EOS reported an unconditional contract backlog of more than $400 million, giving the company strong revenue visibility into 2026 and beyond.
A flood of contracts late in 2025
EOS finished 2025 with a string of major announcements that, in my view, set up a strong 2026.
Here are some of the highlights.
In December 2025, EOS secured a $33 million contract supporting a US Army program, further expanding its presence in North America.
Just days earlier, the company announced a US$21 million remote weapon systems order from a North American customer, with production scheduled through 2026 and 2027.
EOS also entered a US$80 million conditional contract for high-energy laser systems in mid-December with South Korea, opening the door to a large Asian defence market.
These wins came on top of earlier 2025 contracts, including the $108 million LAND 400 Phase 3 remote weapon station contract and multiple Slinger counter-drone orders across Europe and the Middle East.
Why the backlog could keep growing
What makes EOS especially interesting right now is not just what it has already won, but what could come next.
Management has been clear that many of its systems are now proven in the field. In defence, that often leads to repeat orders, upgrades, spare parts, and long-term support contracts.
EOS has also flagged follow-on remote weapon system orders, rising counter-drone demand, and multiple high-energy laser opportunities that could be signed over 2026 and 2027.
Some of these future programs are very large. In previous updates, EOS has pointed to potential opportunities worth hundreds of millions of dollars if negotiations turn into signed contracts.
The global backdrop is doing EOS a big favour
Governments around the world are increasing defence spending, particularly in areas like drone defence, vehicle protection, and automated battlefield systems. These are exactly the markets EOS operates in.
Importantly, EOS is not trying to sell early-stage or unproven technology. Its systems are already deployed and operating, which lowers risk for customers and helps speed up procurement decisions.
That matters when compared with competitors.
For example, Rheinmetall and other European groups have been investing in laser weapons for years, but commercial products are still not widely available. In France and Israel, several defence companies are working on laser and counter-drone systems, but efforts are often spread across multiple partners, with technology ownership shared and deployment still limited.
By contrast, EOS fully owns its key laser technologies and intellectual property, can manufacture independently, and has already secured export contracts.
Why I think EOS can reach $15
At $9.95, EOS is no longer a small or unknown stock. But that doesn't mean it's expensive.
Today, EOS has a market capitalisation of roughly $1.92 billion, while holding more than $400 million in secured contract backlog scheduled to be delivered over the next few years.
With margins improving and multiple large contracts moving from signing into delivery, I believe earnings could rise sharply over the next two years.
If EOS continues converting its backlog into revenue and secures even a portion of its future pipeline, today's valuation may end up looking conservative.
That's why I think $15 in 2026 is achievable.
How EOS stacks up against peers
The valuation case becomes even more interesting when compared with other ASX defence stocks.
For example, DroneShield Ltd (ASX: DRO) currently has a market capitalisation of around $3.04 billion, despite having a smaller value of signed contracts and lower revenue visibility than EOS.
DroneShield focuses mainly on so-called soft-kill counter-drone systems, which disrupt or disable drones electronically. These systems play an important role, but outcomes can vary depending on conditions and countermeasures.
By contrast, EOS specialises in hard-kill solutions using kinetic weapons integrated into remote weapon systems. These systems physically neutralise threats and have been tested extensively in customer field trials, making them attractive for frontline military use.
This difference in capability, combined with EOS's larger secured backlog and growing export footprint, helps explain why I see further upside in EOS shares from here.
Final thoughts
EOS shares have already delivered exceptional returns, but I don't think the market is fully pricing in what lies ahead.
With a growing backlog and multiple large contracts moving into delivery, EOS appears to be entering a new phase of earnings growth.
For investors willing to accept some volatility, I believe EOS shares can reach $15 in 2026 as earnings continue to accelerate.
