It certainly has been a stunning 12 months for Electro Optic Systems Holdings Ltd (ASX: EOS) shares.
During this time, the ASX defence and space stock has risen over 400%.
This would have turned a $1,000 investment into over $5,000.
But is it too late to buy EOS shares now? Let's see what Bell Potter is saying about this high-flying ASX stock.
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What is the broker saying?
Bell Potter notes that the company has announced the completion of its acquisition of MARSS. It said:
EOS has completed the acquisition of MARSS Group, following a $150m placement to institutional investors (excl. $25m SPP) and $40m strategic investment from Calidus LLC and another unnamed investor. The institutional placement was well supported by existing and new institutional investors at a price of $8.00/sh. The proceeds from the raise are to be used to fund the $50m upfront consideration of the MARSS acquisition, as well as growth opportunities in C-UAS, MARSS and Space Control, as well as long lead parts inventory and working capital flexibility.
The broker is positive on the transaction, highlighting that MARSS NIDAR is performing better than it was expecting in the Middle East.
MARSS' C2 NIDAR offering is performing better than our initial expectations with the company securing €102m in new contracts from an existing Middle East customer to deliver a country-wide UAS detection and mitigation capability, with NIDAR' C2 software at its core. With MARSS prevailing over two competing primes, the award reflects NIDAR's demonstrated effectiveness in mitigating Shahed drone and missile attacks in the current Middle East conflict.
It then adds:
The strategic importance of the MARSS acquisition exceeds its near-term financial impact. EOS now has a technically validated and battle-proven C2 offering with a leading position in the Middle East. The integration of NIDAR into a nation's C-UAS stack is sticky in nature and should reap benefits for EOS many years following initial contract terms. Further, MARSS gives EOS the ability to integrate its existing suite of effectors and compete for C-UAS programs as a prime contractor.
Should you buy EOS shares?
According to the note, Bell Potter has retained its buy rating on the company's shares with an improved price target of $10.60 (from $10.40).
Based on its current share price of $8.89, this implies potential upside of 19% for investors over the next 12 months.
Summarising its investment thesis, the broker concludes:
EOS is positioned as a market leader across many C-UAS verticals and is leveraged to increasing budget allocations to C-UAS technologies. EOS possess a catalyst rich next 12 months, with potential HELW, C2 and Slinger awards on the horizon.
