DroneShield Ltd. (DRO:ASX; DRSHF:OTC) had another record year in 2022, primarily attributed to a strong fourth quarter, reported Bell Potter analyst Daniel Laing in a Jan. 31 research note. Based on these results, Bell Potter updated its model on the anti-drone solutions firm, and this resulted in a 24% higher target price.
"With a record order backlog of AU$19 million ($19M) in cash receipts, a proven ability to win AU$10M-plus contracts, and a sales pipeline of AU$200M-plus, we believe DroneShield is now in a position to develop into a major global player," Laing wrote.
Bell Potter's revised price target on the Australian company is AU$0.42 per share, up from AU$0.34. Its current share price, in comparison, is about AU$0.36. DroneShield remains a recommended Buy.
FY22 Revenue Up 59%
Laing highlighted some of DroneShield's recent financial figures:
In Q4/22, DroneShield landed four new contracts amounting to AU$14.7M and likely recorded up to 60% of that revenue, Laing wrote. This drove the 59% increase in full-year 2022 (FY22) revenue (unaudited), which totaled AU$16.9M.
Also, during Q4/22, DroneShield's operating cash flow loss improved significantly, wrote Laing. It was -AU$0.3M versus -AU$0.8M in the previous quarter.
DroneShield ended FY22 with AU$10.3M in cash. By the end of January 2023, that amount had increased to AU$14.1M.
Revised Revenue Estimates
Laing also reported that Bell Potter increased its revenue forecasts for DroneShield for the years 2022, 2023, and 2024. The revised estimate for 2022 is AU$16.9M, reflecting a 6% boost and in line with DroneShield's reported revenue.
Bell Potter's revised estimates for 2023 and 2024 are based on DroneShield's contract backlog and near-term sales pipeline, noted Laing. The new forecasts are AU$30.5M for 2023, 15% higher than the previous estimate, and AU$44.6M for 2024, 18% higher.
"We still expect the company to record positive net operating profit after tax in FY23, accounting for receipt of the government research and development tax incentive grant," Laing added.
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