landed a record $33 million ($33M) contract with the U.S. government to supply anti-drone equipment and related services, reported Bell Potter analyst Daniel Laing in a July 17 research note. Based on this news, Bell Potter increased its target price on DroneShield to $0.45 per share from $0.40, a 12.5% increase.
"This is clearly a business defining contract for the company," Laing wrote. "We believe the most likely near-term sales opportunity is an initial contract for the rollout of counter-drone technology across U.S. military bases."
The Australian defense products company is currently trading at about $0.315 per share, with a potential return of around 43% to the target price, noted Laing.
DroneShield remains a Buy.
Significance of contract
This newly awarded contract is DroneShield's largest, three times the size of its previous record contract, Laing quantified. The $33M contract value is nearly twice the amount of the company's total revenue last year.
Including this contract with the U.S. government, DroneShield's backlog now stands at about $62M, of which Bell Potter expects $50M to be recognized this year, Laing explained. The $50M is much higher than its previous full-year 2023 revenue estimate of $30M.
Accordingly, the investment firm boosted its revenue growth expectations of DroneShield, by 77% for 2023, 34% for 2024 and 6% for 2025.
Further, wrote Laing, DroneShield's sales pipeline contains 80-plus opportunities with a total value of about $200M.
"DroneShield has demonstrated strong earnings momentum in recent periods," wrote Laing. "We believe this momentum is likely to continue with a particularly strong calendar year 2023."
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- DroneShield has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of DroneShield.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
For additional disclosures, please click here.
Bell Potter Disclosures, DroneShield Ltd., July 17, 2023
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