DroneShield Ltd (ASX: DRO) shares have crashed further into the red in Tuesday lunchtime trade.
At the time of writing, the ASX defence stock is down around 11% and is changing hands at just $1.86 a piece.
Today's decline follows a long run of losses over the past couple of months. The shares are now down around 44% for the year-to-date and are 38% below trading levels this time last year.
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What has happened to DroneShield shares today?
The company announced $23.2 million in new European military contracts ahead of the ASX open this morning.
It also announced that its first-half FY26 revenue is expected to come in at $125.8 million, up 74% on the prior corresponding period (PCP). Recurring revenue is estimated at $14.2 million (11.3% of total) for the same six-month period.
Gross margin for the first half is estimated at 60%, lower than 65% in PCP. DroneShield cites sales mix and other factors.
DroneShield also said it forecasts total FY26 revenue in the range of $250 million–$270 million range, up 15–25% on FY25.
It looks like, although the update is strong on paper, forecasts are a miss versus market expectations. Clearly, investors aren't impressed with the update and many have rushed for the exit.
Should I buy DroneShield shares before the end of July? Or is it too late?
The experts are dividend in their outlook for DroneShield shares over the next 12 months. But after today's share price crash, all current target prices implies an upside ahead.
TradingView data shows that out of four analysts, two have a strong buy rating, and two have a sell or strong sell rating.
There is a huge range in the target prices too. The minimum $2.05 target price implies a 10% upside at the time of writing. Meanwhile, the average $3.22 target price implies a potential 73% upside over the next 12 months. And the maximum $4.80 target price suggests that DroneShield shares have the potential to fly 157% higher back to trading levels seen earlier this year.
I expect that brokers could revise their outlooks and target prices on DroneShield shares over coming days.
My view on the ASX defence stock?
I think that at the current trading price, DroneShield shares are currently below fair value. If the defence company manages to maintain its guidance figures (or upsize them) for first-half FY26 at its results announcement next month, it could help ignite some confidence back into the stock.
