Electro Optic Systems Holdings Ltd (ASX: EOS) shares had a day to remember on Tuesday.
The defence and space company's shares rocketed 23% to $10.58 following the release of its half-year results.
Does this mean it is too late to invest? Let's see what Bell Potter is saying about the popular stock.
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What is the broker saying?
Bell Potter highlights that EOS reported underlying EBITDA that was 4% above its estimates in the first half of FY 2026 thanks to better than expected gross margins. It commented:
EOS pre-reported +283% YoY revenue growth to $169m, supported by +322% YoY growth in Defence (BPe +310%) and -4% YoY decline in Space (BPe +31%). EBITDA was $21.6m (4% beat vs. BPe) driven by higher-than-expected gross margins offset partially by higher opex which reflected a 42% YoY expansion in headcount as EOS scales geographic presence for further order book growth plus MARSS sign on bonuses. Statutory NPAT of -$33.7m was materially lower than expectations and driven completely by fair value adjustments to contingent consideration of the MARSS acquisition.
Another positive was the release of an update on its guidance for FY 2026. Bell Potter points out that management is expecting revenue to be significantly better than both it and the market were expecting. The broker explains:
EOS has completed its review of CY26 revenue outlook (including the base business and the newly acquired MARSS business) and now expects full-year revenue to be in the range of $360-400m substantially above BPe of $316m and consensus of $320m. This guide is not conditional on securing future orders. On 12 August 2026, EOS issued a bank guarantee of British £37.1m ($70.9m) to a prospective government customer in the Middle East. This deposit suggests signing of a major Middle East contract is imminent.
In the past, EOS has provided guarantees of 5-20% of the contract value, however, it is feasible that guarantees could be a much higher percentage suggesting potential contract value of between $140-700m. EOS also provided a market development update which detailed several new material opportunities including 1x >$300m follow-on production HELW systems and 5x major MARSS opportunities.
Should you buy EOS shares?
According to the note, Bell Potter has retained its buy rating and $12.60 price target on EOS shares.
Based on its current share price, this implies potential upside of almost 20% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
Retain Buy. EOS is positioned as a C-UAS market leader leveraged to increasing budget allocations to C-UAS tech. The next 3-12 months is catalyst rich for EOS.
