Electro Optic Systems Holdings Ltd (ASX: EOS) shares could be a great way to gain exposure to the counter-drone market.
That's the view of analysts at Bell Potter, which remain positive on this ASX stock.
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What is the broker saying?
Bell Potter notes that EOS released its FY 2025 results on Monday and delivered a mixed set of numbers. It said:
EOS reported a -27% YoY revenue decline to $128.5m above BPe of $126.6m, driven by -30% YoY decline in Defence (BPe -30%) and +17% YoY growth in Space (BPe -10%). EBIT was -$53m (-15% miss vs. BPe). CY26 gross margin was 63% (BPe 55%) reflecting finalisation of Middle East contract in 1H25 and stronger than expected 2H26 margin of 57%.
Looking ahead, Bell Potter was pleased to see that management is positive on its outlook. One slight disappointment, though, is that the deposit for the controversial US$80 million High Energy Laser Weapon (HELW) Korean contract has yet to be received. However, it is hopeful this will be settled next month, which should put an end to short seller concerns. It adds:
EOS says that market conditions remain supportive. The initial deposit and letter of credit has yet to be received for the US$80m High Energy Laser Weapon (HELW) Korean contract. EOS believes this could be concluded in March 2026. EOS has provided a detailed view of the sales opportunities, including: German and UAE HELW product demonstrations (potential 2027 order); next-gen RWS demonstration (+$500m) in the Middle East; and US Army follow-on Slinger opportunities. We view the German HELW demonstration as an important development given the potential size of this market and in the context of increased government scrutiny on the costs of the Rheinmetall/MBDA HELW Joint Venture.
Should you buy this ASX counter-drone stock?
According to the note, the broker has retained its buy rating on EOS shares with a reduced price target of $9.70 (from $12.00).
Based on its current share price of $7.75, this implies potential upside of 25% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
We retain our Buy rating and lower our TP to $9.70 on lower CY27e earnings. EOS is positioned as a market leader in C-UAS solutions, particularly in directed energy, and is leveraged to increasing budget allocations to C-UAS technologies. We see positive news flow over the next 6 months stemming from C-UAS and RWS contract awards.
