DroneShield Ltd. (DRO:ASX; DRSHF:OTC) has once again captivated investor attention, with its share price soaring by 6.23% last night to a new record high of US1.45 per share. This marks a remarkable gain of 625% since the National Inflation Association's initial recommendation at AU$0.20 per share.
On May 6, DroneShield's main competitor, DeDrone, was acquired by Axon Enterprise (AXON), according to DeDrone's press release. At that time, DroneShield's shares were trading at AU$0.83, highlighting the company's rapid ascent since then. The acquisition underscored the growing value and interest in the counter-drone technology sector, positioning DroneShield as a key player.
DroneShield and Healwell AI (TSX: AIDX) are touted as two AI companies significantly impacting the world. Both are on trajectories to become multi-billion-dollar market cap entities, driven by their innovative technologies and market strategies. For those without access to ASX or TSX trading, One Stop Systems (OSS) and Zedge (ZDGE) are recommended as undervalued U.S. AI-related stocks.
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Company Catalysts
Several factors are propelling DroneShield's share price to new heights. The company recently completed a successful share placement, raising AU$30 million through the sale of 37.9 million shares at AU$0.80 each. This followed an oversubscribed share purchase plan in April, which saw overwhelming demand, leading to an increase in the subscription from AU$5 million to AU$15 million, with AU$40 million worth of orders hoping to participate in the capital raise.
In the first quarter of 2024, DroneShield reported a phenomenal 900% year-over-year revenue surge to AU$16.4 million. Analysts at Bell Potter have responded positively, giving a buy rating and projecting $97 million in sales and AU$24.4 million in earnings for the year. The company's bullish outlook includes a scenario where sales could grow to AU$500 million, a projection that has driven further investor interest.
Chief Executive Officer Oleg Vornik has emphasized the significant undersupply in the counter-drone market and rising demand from both public and private sectors as key growth drivers. This optimism is reflected in the company's recent performance and market reception.
DroneShield develops technology to protect against drone attacks, catering to customers such as militaries, governments, and critical infrastructure sectors. Its flagship product is a suite of software solutions designed to detect and disable drones, positioning the company at the forefront of counter-drone technology.
As reported by Motley Fool, DroneShield secured a $5.7 million repeat contract with a U.S. Government customer and a groundbreaking framework agreement with NATO, both expected to significantly boost long-term sales. As the counter-drone market continues to grow, DroneShield anticipates further expansion, leveraging its strategic partnerships and innovative solutions to capture a larger market share.
With its share price closing at AU$1.36 on Wednesday, DroneShield remains a focal point for ASX investors. The company's strategic partnerships and position in the emerging counter-drone technology sector offer reasons for optimism. However, potential investors should remain mindful of the risks and consider their individual circumstances before investing.
Expert Opinions
On June 3, analyst Abraham Akra from Shaw and Partners initiated coverage on DroneShield Limited with a Buy recommendation and a price target of AU$1.40. Akra emphasized that DroneShield is well-positioned to capitalize on the rising global defense spending and the increasing focus on counter-drone (C-UAS) capabilities. "DroneShield is a market leader and early mover in counter-drone (C-UAS) tech. DRO specializes in advanced AI-driven counter-drone and electronic warfare solutions for terrestrial, maritime, and airborne platforms. Products can support fixed and mobile deployment," Akra stated. He highlighted that DRO's customers include military, intelligence communities, government agencies, law enforcement, critical infrastructure operators, and airports globally.
Akra estimated the total addressable market for C-UAS technology to exceed AU$10 billion, with the military accounting for approximately 37% of this market and currently less than 1% market saturation. "We expect DRO's 10-year track record, certifications, and product suite across mobile and fixed site C-UAS to facilitate sales growth exceeding market growth rates," he noted.
Akra also highlighted the rising global defense spending driven by escalating geopolitical tensions and advancements in military technologies. "The U.S. Department of Defense (DoD) is expected to increase its budget by 4% Y-Y in FY25 to AU$850B. NATO member nations are also projected to boost defense spending by 10% Y-Y to AU$380B in CY24. We expect DRO to benefit, as have comps, from a focus on C-UAS," Akra stated. He noted that DroneShield is among the few C-UAS systems approved by the US DoD for both mobile and fixed site defense.
Ownership and Share Structure
Streetwise Ownership Overview*
DroneShield Ltd. (DRO:ASX; DRSHF:OTC)
Management and insiders own 11% of the company. CEO Oleg Vornik owns 2.23% of the company with 15 million options on a fully diluted basis.
Non-Executive Chairman Peter James owns 0.58% of the company with 920k shares and 3 million options, on a fully diluted basis, and Non-Executive Director Jethro Marks owns 0.22%, with 1.5 million options, on a fully diluted basis, according to DroneShield.
The company reports that the largest independent investor, Charles Goode, owns 4.41% of the company with 21.5 million shares, while strategic investors own a total of 13.99% of the company.
Eprius Inc. is the second largest shareholder, with 3.16% of the company having 18.5 million shares.
The company reports that there are about 70 million shares outstanding and about 526.8 million free-float traded shares.
Its market cap is about AU$977.57 million, and it trades in a 52-week range of AU$1.37 and AU$0.21.
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Important Disclosures:
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of DroneShield Ltd.
- James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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