It may not have been a smooth ride, but DroneShield Ltd (ASX: DRO) shares have risen very strongly over the past 12 months.
During this time, the counter drone technology company's shares have climbed almost 300%.
Does this make it too late to invest? Let's see what one leading broker is saying about the high-flyer.
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What is the broker saying?
According to a recent note out of Bell Potter, its analysts think there's still an opportunity for investors to buy DroneShield shares.
It was pleased with its performance in FY 2025 even if it did slightly underperform with its earnings due to softer margins. The broker 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.
While DroneShield was forced to record some asset impairments in FY 2025, Bell Potter believes this will improve in the future with the introduction of a new Enterprise Resource Planning (ERP) system. It said:
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.
Decent upside remains
Despite almost quadrupling over the past 12 months, Bell Potter still sees value in DroneShield shares.
The note reveals that the broker has a buy rating and $4.85 price target on them. Based on its current share price of $4.15, this implies potential upside of 17% for investors over the next 12 months.
Bell Potter's bullish view on the stock is supported by its belief that DroneShield's market-leading products leave it well-positioned to benefit from increasing demand. It explains:
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.
