Two ASX defence shares that have drawn plenty of attention over the past year are Droneshield Ltd (ASX: DRO) and Electro Optic Systems Hldgs Ltd (ASX: EOS).
DroneShield shares have risen 310% in the last 12 months, and Electro Optic Systems shares have risen 804%.
Despite racing higher, both companies fell significantly during February.
But, it was good news yesterday for holders of these companies as they enjoyed rises of more than 8%.
Investors may now be wondering whether to hop on or off this roller coaster of volatility.
Yesterday's recovery could mark a point for holders to take profits. Or it could be the beginning of another rally.
Here is what experts are saying.
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Can DroneShield shares return to record highs?
DroneShield develops and sells artificial-intelligence-powered hardware and software to detect drones used by the likes of terrorists and criminals.
The company's solutions protect people, organisations, and critical infrastructure from the intrusion of drones.
It has benefited from increased defence spending amidst geopolitical conflict over the last year or so.
DroneShield shares closed yesterday at $4.02 each.
While that's much higher than this time last year, it's still well below 52-week highs over $6.70 last October.
Recent targets from brokers indicate it could be set to increase over the next 12 months, although it might not reach those peaks experienced last year.
Bell Potter recently put a buy rating and $4.80 price target on DroneShield shares.
Forecasts from analysts via TradingView have a one year price target of $4.90.
Based on these targets, there is an estimated upside of approximately 20%-22%.
Temper expectations for EOS
Electro Optic Systems Holdings Ltd operates in the defence technology sector. The company develops products such as remote weapon systems (RWS), counter-drone technology, and high-energy laser systems.
Much like DroneShield, it has benefited from recent defence tailwinds.
It closed yesterday at $10.76.
It is hovering much closer to yearly highs, and estimates from brokers are mixed.
Following earnings results last month, Bell Potter put a reduced price target of $9.70 (from $12.00) on the company.
On a more positive note, Ord Minnett has a speculative 'buy' rating on EOS with a price target of about $12.95.
Based on these targets, the stock price could swing almost 10% to the negative or 20% higher.
Much of the success of the company will hinge on its ability to successfully convert its contracts into revenue.
Analysts ratings via TradingView sits in between the two, with an estimated 7% upside for these defence shares.
