The DroneShield Ltd (ASX: DRO) share price is taking a hit today.
Shares in the S&P/ASX 200 Index (ASX: XJO) drone defence company closed on Friday trading for $4.51. During the Monday lunch hour, shares are swapping hands for $3.89 apiece, down 6.3%.
For some context, the ASX 200 is down 1.2% at this same time.
Today's underperformance is not par for the course for the ASX defence stock.
Despite today's retrace, the DroneShield share price remains up 33.9% since market close on 6 February. And shares are still up a whopping 266.2% over 12 months, smashing the 4.9% one-year gains posted by the benchmark index.
But following the recent strong share price gains, Alto Capital's Tony Locantro believes investors would do well to take profits (courtesy of The Bull).
Image source: Getty Images
Is the DroneShield share price stretched?
"DroneShield operates in the counter-drone defence technology sector, providing detection and mitigation systems used to protect military, government and critical infrastructure assets," said Locantro, who has a sell recommendation on the ASX 200 stock.
According to Locantro:
The company has benefited from strong investor interest in defence and security technologies, with the share price rallying sharply over the past year in response to geopolitical tensions and intensifying defence spending narratives.
And investors may have gotten ahead of themselves by driving that 266% 12-month increase in the DroneShield share price.
Locantro noted:
While the long-term outlook for counter-drone solutions remains compelling, DroneShield's valuation increasingly reflects significant future growth expectations. Revenue remains contract-driven and can be uneven, with earnings visibility still developing as the company scales up globally.
Summarising his sell recommendation on the ASX 200 defence stock, Locantro said, "Following recent share price strength and a re-rating, the current risk-reward balance favours taking profits at present levels."
What's the latest from the drone defence company?
DroneShield reported its full calendar year 2025 results on 25 February.
Highlights included a 276% year-over-year increase in revenue to $216.5 million.
In other core financial metrics, earnings before interest, tax, depreciation and amortisation (EBITDA) of $4.5 million were up from a loss of $8.6 million in 2024.
And on the bottom line, profit after tax of $3.5 million increased by 367%.
Looking ahead, DroneShield independent non-executive chairman Peter James said, "FY 2026 already has $104 million in secured revenue of which $22 million has been recognised to date."
The DroneShield share price closed up 12.6% on the day of the results release.
