DroneShield Ltd (ASX: DRO) shares are back near their lowest level in a year after another fall on Wednesday.
The counter-drone stock finished the session down 2.83% at $1.72, taking its 2026 decline to around 44%.
It has been quite a reversal from last year, when DroneShield shares climbed as high as $6.71.
There was some hope of a turnaround in early August when the share price pushed above $2.20, but that bounce didn't last long. The stock has since drifted lower again and is now only around 5% above its 52-week low of $1.62.
Still, I think the setup is becoming much more interesting at these levels.
Here's why.
Image source: Getty Images
Revenue keeps climbing
The recent half-year result certainly gave investors a few things to worry about.
Underlying EBITDA swung to a $12.4 million loss, while DroneShield reported a statutory net loss of $32.2 million.
But the top line continues to move in the right direction. First-half revenue jumped 74% to $125.8 million, while recurring revenue increased 229% to $11.5 million.
DroneShield also had $240 million of committed FY26 revenue as at 21 August. That covers between around 90% of its full-year revenue guidance of $250 million to $270 million.
There is another $43 million already committed for FY27 and beyond, while the company finished June with $180 million in cash and term deposits and no debt.
More growth ahead?
I also like what the company is doing on the product side.
DroneShield recently launched its new RfAI-3 software engine and flagship RfRecon hardware, which is designed to identify, locate and assess radio-frequency activity.
Bell Potter believes these products can help drive more contract wins, particularly in Europe, and said the top end of FY26 revenue guidance "looks achievable". The broker kept its 'buy' rating after the half-year result, although it trimmed its price target from $2.50 to $2.40.
From yesterday's closing price, that suggests potential upside of around 40%.
Canaccord Genuity is even more bullish with a $2.60 target, although not every broker agrees for now. Jefferies sits at $1.45 and Ord Minnett at $1.50.
Why I'd be buying
DroneShield is clearly not a low-risk stock. It is still losing money, margins need to improve, and short interest remains very high at 15.5%.
But a lot has also changed in the share price.
At $1.72, investors are paying a very different price to the $6-plus levels seen last year, while revenue, committed orders and the product pipeline continue to grow.
I wouldn't try to pick the exact bottom. But if I wanted long-term exposure to the counter-drone sector, I'd be comfortable buying a small position around these levels.
