Electro Optic Systems Holdings Ltd (ASX: EOS) shares have been in the spotlight this week.
In response to the release of the defence and space company's quarterly update, its shares jumped over 8% to $7.45 on Monday.
While this means EOS shares are up 140% since this time last year, one leading broker doesn't believe it is too late to invest.
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What is the broker saying?
Bell Potter was pleased with the update and highlights that the company has upgraded its guidance for FY 2026. It said:
Unaudited revenue for 1H26 was ~$169m (BPe $103m) with ongoing conflicts and regional tension supporting demand for EOS' products. EOS upgraded base business (excl. MARSS) CY26 revenue guidance range to $280-300m up from $240-270m (BPe $252m), which if secured, would represent a record revenue result for EOS.
There was more good news, with EOS advising that it expects EBITDA to be positive for the first half. This compares to Bell Potter's previous estimate for an EBITDA loss of $9.9 million for the period. It commented:
The upgrade to the guidance, previously given in June 2026, was driven by detailed work to optimise plans for production/delivery, reassessed results to date and the current order book. EOS expects underlying EBITDA to be positive for 1H26, higher than our $9.9m forecasted loss for 1H26e.
Looking ahead, Bell Potter is feeling positive, highlighting that "the contract backlog as at June 2026 is $846m, a record level, supported by several large announced and small unannounced awards"
Buy EOS shares
According to the note, in response to the update, Bell Potter has retained its buy rating on EOS shares with an improved price target of $12.60 (from $12.50).
Based on its current share price of $7.45, this implies potential upside of almost 70% for investors over the next 12 months.
Commenting on its investment thesis, Bell Potter said:
We retain our Buy rating and raise TP to $12.60 on higher multiple. EOS is positioned as a market leader across many C-UAS verticals and is leveraged to increasing defence budget allocations to C-UAS technologies. Key catalysts over next 3-12 months: Large MARSS C2 Middle East signings and two large UAE HELW JV orders.
EBITDA changes: +84%/-4%/-7% in CY26/27/28e reflecting upgraded CY26 revenue in alignment with guidance and upwardly revised MARSS opex estimates.
