The DroneShield Ltd (ASX: DRO) share price has been a strong performer over the past 12 months.
During this time, the counter-drone technology company's shares have risen almost 350%.
To put that into context, a $10,000 investment a year ago would now be worth almost $45,000.
Let's see what Bell Potter is saying about the company and where it thinks its shares could be heading from here.
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What is the broker saying?
Bell Potter has been running the rule over DroneShield's full-year results and was relatively pleased with what it saw. It said:
DRO reported +276% YoY revenue growth to $216.5m in line with BPe. Gross margin (excluding inventory impairment) came in at 64.8% (BPe 67.9%). Opex was $125.3m (BPe $127.8m) led by headcount growth and higher share-based payments.
Stripping out share-based payments ($23.5m) which was unusually elevated during the year, underlying EBITDA was $36.5m an improvement on the CY24 loss of -$4.0m and driven by strong revenue growth. Statutory NPAT was $3.5m. The miss to uEBITDA was driven by weaker than expected gross margin in 2H26e, although it was in line with company guidance.
And while there was an inventory impairment due to customer demand changes, the broker is optimistic that its new systems will prevent wastage in the future. It adds:
DRO recorded $8.5m finished goods and $1.8m raw materials inventory impairments relating to earlier model DroneGuns with customer demand moving to the latest version of the DroneGun Mk4. New ERP implementation aims to reduce wastage in future.
Where next for the DroneShield share price?
The good news is that Bell Potter believes there's still plenty of upside ahead for this high-flying stock.
According to the note, the broker has retained its buy rating on its shares with a trimmed price target of $4.80.
Based on the current DroneShield share price of $3.69, this implies potential upside of 30% for investors over the next 12 months.
Commenting on its buy recommendation, Bell Potter said:
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 C-UAS 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 $2.3b potential sales pipeline over the next 3-6 months as defence budgets roll over to FY26e. At 35x CY26e EV / EBITDA, DRO trades at a discount to the global drone peer group. Further, we see upside risk to our revenue forecasts in CY26/27e, given the opportunities observed in the C-UAS industry.
