Analyst Targets Drone Cybersecurity Company for 77% Upside Gains
Research Report

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Disclosures for Litchfield Hills Research, Mobilicom Ltd., September 2, 2025

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On September 2, 2025, Litchfield Hills Research analyst Barry M. Sine, CFA, CMT, initiated coverage on Mobilicom Ltd. (MOB:NASDAQ) with a Buy rating and a 12-month price target of US$10.00, representing 77% upside from the share price at the time of the report of US$5.64.

Sine cited the company's early-stage traction in defense unmanned aerial systems programs and differentiated roadmap toward secure autonomous drone technologies as key drivers for the investment thesis.

Company Overview and Strategic Evolution

Mobilicom Ltd. is a drone technology company offering hardware and software products, support, and integration services to major defense contractors in the United States, Europe, and Asia. The company serves all three major Israeli defense contractors and has established supplier relationships with tier-1 defense contractors, including Teledyne and Rafael.

Sine outlined a three-phase growth evolution for the company. Currently, Mobilicom is selling modules with embedded software to tier-1 unmanned aerial systems manufacturers. The analyst expects revenue acceleration over the next 12-24 months as the company expands supplier roles with U.S. and Israeli military programs, with products validated by the Pentagon's Blue UAS list. The long-term vision involves "enabling cyber-secure autonomous drone fleets for defense and commercial markets with high-margin embedded software driving profitability."

Technology Differentiation and Product Portfolio

The company's technology portfolio includes three software platforms: OS3 Cybersecurity Platform Software, ICE Electronic Warfare Resistant Suite, and ControliT cloud network management system. Hardware offerings comprise MCU Mesh Networking software-defined radios, SkyHopper Datalinks, and Mobile Ground Control Stations.

Sine emphasized the technology's proven capabilities, noting that "Mobilicom's OS3 and ICE cybersecurity platforms and mesh networking solutions are proven against state-of-the-art Russian and Chinese jamming threats, offering one of the world's most secure architectures for unmanned systems."

The company's solutions have been validated in demanding environments, including Gaza and Ukraine.

Pentagon Blue List Validation

A major milestone occurred in February 2025 when three of Mobilicom's SkyHopper products were named to the Defense Innovation Unit's Blue List Framework. According to Sine's analysis, while 11 vendors supply 37 products under the radio category, only Mobilicom and Silvus Technologies offer advanced software-defined radios, with Silvus recently acquired by Motorola Solutions for US$4.4 billion.

The analyst noted that of the Blue List competitors, "just six make their own hardware while the rest are reselling or repackaging other hardware." This positioning suggests significant differentiation for Mobilicom in the secure communications market.

US Government Policy Catalyst

Multiple U.S. government actions are accelerating unmanned aerial systems adoption, creating favorable market conditions. The National Defense Authorization Act prohibited Defense Department purchases from Chinese drone companies, while the American Security Drone Act extended these restrictions. President Trump's "Unleashing American Drone Dominance" Executive Order specifically requires use of U.S. or friendly drones and drone parts.

Defense Secretary Pete Hegseth's July 2025 memo classified small drones as ammunition rather than aircraft, enabling combat units to purchase them directly and bypass slow acquisition processes. Sine noted that "military credit cards can now be used to buy drones, and each service branch must stand up active-duty drone formations by September 1, with full integration into combat training by 2026."

Financial Performance and Projections

Mobilicom reported revenue of US$3.1 million in 2024, with U.S. and Canadian revenue representing 50% of total revenue in the first half of 2025, up from 30% in the first half of 2024. The analyst projects revenue growth to US$5.0 million in 2025, US$10.0 million in 2026, and US$25.0 million in 2027.

Gross margins are expected to expand from 58% to 65% by 2027 as software becomes a larger portion of the product mix. The company is projected to achieve positive EBITDA of US$8.8 million by 2027, with Sine noting that "operating expenses are only likely to grow around 20% annually" due to the company's lean operating model.

Strategic Partnerships and Commercial Expansion

Mobilicom has announced four strategic partnerships to advance its autonomous unmanned aerial systems strategy. The partnerships with DT Research, Aitech, ARK Electronics, and Palladyne AI leverage Mobilicom's OS3 cybersecurity software platform and extend capabilities into commercial applications.

The Palladyne AI partnership is particularly significant as it "takes Mobilicom into the commercial sector, where we believe UAS and robots will increasingly be used in applications such as package delivery by companies like Amazon and in industrial factory settings."

Balance Sheet and Funding

The company maintains a solid balance sheet with US$6.83 million in cash and cash equivalents as of June 30, 2025, with no debt.

Sine estimates US$1.9 million to US$16.6 million of potential incremental cash from warrant exercises across two series, with full warrant exercise potentially bringing total cash to approximately US$27.2 million, including recent at-the-market sales.

Market Opportunity and Military Programs

The analyst detailed multiple U.S. and Israeli military procurement programs representing significant revenue opportunities. U.S. programs include the US$1 billion Replicator Initiative, US$360 million Taiwan drone sale, and various service-specific programs totaling hundreds of millions in potential contracts.

Israeli military procurement has accelerated following October 2023 events, with emergency purchases and large foreign military sale requests. The Israel Ministry of Defense awarded approximately US$40 million in contracts to Elbit Systems for ISR drones and autonomous systems in December 2024.

Valuation Methodology and Risk Assessment

Sine's US$10.00 price target applies peer-group 2026 estimated enterprise value-to-revenue multiples of approximately 10x to Mobilicom's projected fiscal 2026 revenue. The company currently trades at a 40% discount to defense technology and unmanned systems peers on an enterprise value-to-revenue basis.

Key risks include cybersecurity threats from state actors, noting that "Mobilicom's products are designed to intentionally operate in the face of some of the most hostile security threats in the world, facing technology from Russia, China, North Korea, and Iran." Additional risks include potential failure to win contracts with major tier-1 vendors supplying Pentagon or Israeli Ministry of Defense programs.