On May 15, 2026, Craig Irwin of Roth Capital Partners (ROTH) reiterated a Buy rating and US$25.00 price target on Unusual Machines Inc. (UMAC:NYSEAMERICAN), implying roughly 48% upside from the May 14, 2026 closing price of US$16.93, following a sizable first-quarter revenue beat driven by intense demand for the company's drone components and a clear management push to expand capacity.
Financial Results
Unusual Machines reported 1Q26 revenue of US$8.1M, adjusted EPS of (0.03), and adjusted EBITDA of $(2.6M), ahead of ROTH's estimates of US$5.5M/ (0.09)/(2.7M) and the consensus figures of US$5.5M/ (0.09)/$(1.4M).
Revenue compared with US$4.9M in 4Q25 and US$2.0M in 1Q25, marking the company's eighth consecutive quarter of record revenue. Enterprise sales of US$7.3M accounted for roughly 90% of the total.
Gross margin came in at 32.8%, modestly above the 32.0%/32.1% ROTH and consensus marks, though below the 36.2% posted in 4Q25 and up sharply from 24.3% in 1Q25. The company exited the quarter with US$222.9M in cash and no debt.
Demand and Capacity Expansion
Management confirmed that demand is significantly outstripping supply and expects that dynamic to persist into 2027, with growth anchored by the U.S. Department of War (DoW) Drone Dominance program, where Phase II is expected to include delivery of more than 60,000 units. Roth also flagged government funding tailwinds, noting that the proposed budget for the drone-focused Defense Autonomous Warfare Group (DAG) is expected to reach approximately US$50B+.
To meet this demand, headcount has climbed from 81 employees exiting 2025 to 141 exiting 1Q26 and roughly 200 today. The company added a third shift to its motor line and a second shift to its assembly line, placed US$75M in raw material orders in April against roughly six-month lead times, and opened two new Orlando facilities during the quarter while continuing to seek additional space. Irwin characterized the added shifts as "short-term solutions to DoW-driven demand," and management expects cost per employee and operating expense growth to moderate as operating efficiencies take hold.
Strategic Initiatives
Earlier in the week, Unusual Machines announced an agreement to acquire DroneNX LLC, operator of Upgrade Energy, a patent-protected producer of batteries and power systems for drones and unmanned aerial systems, for US$52M, split evenly between cash and stock. Upgrade Energy generated approximately US$6M in 2025 revenue and operates an 18,000-square-foot manufacturing facility in Torrance, CA.
The deal advances the company's goal of in-house battery pack production, which management expects to be margin accretive, with closing anticipated shortly after completion of Upgrade Energy's 2025 audit. Roth plans to add the acquisition to its model once the transaction closes.
Estimates and Valuation
Roth raised estimates to reflect the 1Q26 traction while leaving the broader forecast largely unchanged, and lowered its 2026 gross margin assumption by 400 basis points after management was clear it will "prioritize growth and capacity execution over short-term profitability." The firm now models 2026 revenue of US$36.6M and 2027 revenue of US$55.0M.
The US$25.00 price target rests on a 22x price-to-sales multiple applied to the 2027 revenue estimate; drone industry peers trade at average price-to-sales multiples of 12.2x and 10.1x on 2026 and 2027 estimates, with a wide range spanning 1.5x for Knightscope, Inc. (KSCP; not covered) to 51.3x for Swarmer, Inc. (SWMR; not covered). Roth views the 22x multiple as fair given the company's diversified positioning and growth potential, and supports the target with a discounted-EPS analysis under a 2035 10% sum-of-value scenario that envisions a US$10B+ market, 10%+ share capture, and net income above US$175M.
Risks
Roth flagged customer and supplier concentration risk given a limited number of significant customers and the absence of long-term binding supply contracts; manufacturing execution risk tied to entry into a new battery business; competition from larger, better-resourced rivals that could chase business on price; tariff and inflation risk; regulatory risk around FAA and other approvals; trade risk from U.S. export and import controls; intellectual property protection risk; and the risk inherent in a limited operating history with continued net losses. The firm also noted that the shares carry volatility risk because the current valuation anticipates substantial future growth.
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Important Disclosures:
- Unusual Machines is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$3,000 and US$6,000.
- As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Unusual Machines Inc.
- 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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Disclosures for Roth Capital Partners, Unusual Machines Inc., May 15, 2026
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Disclosures: Rating and Price Target History for: Unusual Machines Inc. (UMAC) as of 05-14-2026 25 20 15 10 5 0 Q1 Q2 Q3 2024 Q1 Q2 Q3 2025 Q1 Q2 Q3 2026 Q1 Q2 05/13/26 I:B:$25 Created by: BlueMatrix Each box on the Rating and Price Target History chart above represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the first note written during the past three years. Distribution Ratings/IB Services shows the number of companies in each rating category from which Roth or an affiliate received compensation for investment banking services in the past 12 months. Distribution of IB Services Firmwide IB Serv./Past 12 Mos. as of May 15, 2026 Rating Count Percent Count Percent Buy [B] 370 74.75 102 27.57 Neutral [N] 86 17.37 7 8.14 Sell [S] 3 0.61 1 33.33 Under Review [UR] 36 7.27 17 47.22 Our rating system attempts to incorporate industry, company and/or overall market risk and volatility. Consequently, at any given point in time, our investment rating on a stock and its implied price movement may not correspond to the stated 12-month price target. Ratings System Definitions - ROTH Capital employs a rating system based on the following: Buy: A rating, which at the time it is instituted and or reiterated, that indicates an expectation of a total return of at least 10% over the next 12 months. Neutral: A rating, which at the time it is instituted and or reiterated, that indicates an expectation of a total return between negative 10% and 10% over the next 12 months. Sell: A rating, which at the time it is instituted and or reiterated, that indicates an expectation that the price will depreciate by more than 10% over the next 12 months. Under Review [UR]: A rating, which at the time it is instituted and or reiterated, indicates the temporary removal of the prior rating, price target and estimates for the security. Prior rating, price target and estimates should no longer be relied upon for UR-rated securities. Not Covered [NC]: ROTH Capital does not publish research or have an opinion about this security. ROTH Capital Partners, LLC and its affiliates expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2026. Member: FINRA/SIPC.
