Drone Incursions in Europe Spotlight C-UAS
Research Report

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Disclosures for Shaw and Partners, DroneShield Ltd., October 1, 2025

Shaw and Partners Limited ABN 24 003 221 583 (“Shaw”) is a Participant of ASX Limited, Cboe Australia Pty Limited and holder of Australian Financial Services Licence number 236048. ANALYST CERTIFICATION: The Research Analyst who prepared this report hereby certifies that the views expressed in this document accurately reflect the analyst's personal views about the Company and its financial products. Neither Shaw nor its Research Analysts received any direct financial or non-financial benefits from the company for the production of this document. However, Shaw Research Analysts may receive assistance from the company in preparing their research which can include attending site visits and/or meetings hosted by the company. In some instances the costs of such site visits or meetings may be met in part or in whole by the company if Shaw considers it is reasonable given the specific circumstances relating to the site visit or meeting. 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DroneShield Ltd.'s (DRO:ASX; DRSHF:OTC) counterdrone technologies and capabilities are what are preferred for the proposed drone wall in Europe, reported Shaw and Partners Senior Analyst Abraham Akra in an October 1 research note.

"Passive RF (radio frequency) sensing and artificial intelligence (AI) fusion favor DroneShield, whose portable DroneSentry kits scale cheaply," Akra wrote.

Target, Rating Unchanged

Despite the buzz about a drone wall, Shaw and Partners maintained its AU$3.60 per share target price on the counterdrone supplier.

However, at the time of Akra's report DroneShield'xs share price already had shot past the target and was trading at about AU$4.54 per share.

The defense company remains a Buy.

C-UAS in the Spotlight

In September, many incidents of drones, most often Russian, illegally invading the airspace of North American Treaty Organization and European Union countries increased concerns about airspace security and infrastructure. This called attention to advanced counter-unmanned aerial systems (C-UAS) and their role in defense.

Leaders of many countries met recently to discuss possibly creating a multilayered counterdrone network along Europe's eastern border to cost effectively detect and neutralize drones illegally violating other countries' airspace. The involved geographies would be Involving Estonia, Latvia, Lithuania, Finland, Poland, Romania, Bulgaria, Denmark, Norway and Ukraine, not Hungary or Slovakia.

DRO's Technology Preferred

Akra discussed three of the steps in the C-UAS kill chain and how DroneShield's products are equipped for each.

Because the detect and assess steps dominate, counterdrone products require sensors to find, fix on and track threats early, Akra wrote. DRO's systems, effective against commercial drones, use radiofrequency sensors for passive detection. These systems offer portable, low-power options for use in and out of conflict zones.

As for assessment, which involves identifying and classifying drones as threats or not threats, "AI driven assessment makes DRO best in class," wrote Akra. AI-enabled processing speeds up the friend or foe determination and reduces false positives and operator burden. This technology is integrated into DroneShield's DroneSentry platform.

When dealing with a threat, noted Akra, a layering approach is best: first disrupt then escalate to a hard kill as needed. Various disruption methods exist, such as breaking control links, autonomy, frequency hopping and laser defeat, but nonkinetic disruption, or jamming, is the lowest-cost, most scalable first layer, and "DRO leads the market." The company's portable and vehicle kits give infantry and security forces credible and rapidly exportable tools when and where they need them.

As for the use of high-energy lasers in disruption, the approach lags the other options because lasers have limited effectiveness in bad weather, humidity, dusty environments and swarms and because lasers have dwell time limits. They require a lot of power and cooling as well, and their mobility is limited.

"After billions in research and development, U.S. services still struggle to turn lasers into dependable field capabilities," Akra wrote.

More Stock Data

The company has a market cap of AU$4 billion. Its 52-week range is AU$0.59–4.54 per share.

Major shareholders of DroneShield are Fidelity Management & Research Co. LLC with 8.1%, Regal Funds Management Pty Ltd. with 5.4%, State Street Global Advisors, Australia with 4.1%, The Vanguard Group, Inc. with 3.3% and Epirus Inc. with 2.1%.