Down 12% in a month: Is the EOS share price ready to explode?

Could this ASX defence stock be ready for another run?

After a huge run over the past year, Electro Optic Systems Holdings Ltd (ASX: EOS) shares are starting to lose some heat.

At the time of writing, the EOS share price is down 2.42% to $9.67.

That takes its fall over the past month to almost 12%, leaving investors to wonder whether this is just a pause after a massive rally.

It is not as if the stock has gone cold completely. EOS shares are still up around 270% over the past year, although they are now only slightly higher in 2026 with a gain of about 2%.

With the company still winning defence contracts and brokers still seeing upside, this pullback is worth a closer look.

Soldier in military uniform using laptop for drone controlling.

Image source: Getty Images

The big run is cooling off

The recent weakness looks more like the market taking a breather after the stock's big rally.

After climbing so far, some investors may be happy to take a profit while they wait for the next update.

The company has been supported by a series of contract wins, higher defence spending, and growing demand for counter-drone and remote weapon systems (RWS).

There has also been plenty for the market to take in.

Earlier this month, EOS announced new sales orders worth about $38 million. The larger one was for a US$16 million Naval 400 RWS, which will be supplied to a new customer in the Middle East.

MARSS, its command-and-control business, also received an 8-million-pound order for a new counter-drone command and training centre.

Before that, EOS announced a much larger US$124 million deal for its Slinger counter-drone RWS.

That deal came from Generation 5 Holding in the UAE and includes systems, cannons, spares, training, and other supplies.

Delivery is expected across 2027 and 2028, subject to customer and export approvals.

Brokers are still upbeat

The recent pullback hasn't stopped brokers from seeing more upside in EOS shares.

Bell Potter recently kept its buy rating on EOS and lifted its price target to $12.50. Based on the current share price of $9.67, that suggests potential upside of about 29%.

Ord Minnett is also backing the stock, recently lifting its target to $11.45. That points to a possible upside of about 18% from today's level.

The upbeat broker view seems to come down to the order book, counter-drone demand, and the laser weapon joint venture in the UAE.

That venture is focused on developing and manufacturing 100-kilowatt and 200 to 300-kilowatt laser weapon products.

Can EOS shares bounce back?

After a 12% pullback, I would not be writing this one off.

EOS shares have declined recently, but the stock hasn't lost the key things that drove the rally in the first place.

The company is still winning work, brokers are still positive, and the all-time high of $12.58 sits just above Bell Potter's $12.50 target.

If EOS lands another decent contract, I think the share price can have another crack at that high.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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