ASX Defence Stocks Face-Off: Is EOS the Better Buy Than DroneShield Right Now?

DroneShield (ASX: DRO) was the ASX’s star performer for much of 2025, but executive share sales, a US CEO resignation, and governance concerns have sent shares tumbling from $6.71 to around $2.00. Meanwhile, Electro Optic Systems (ASX: EOS) has quietly built a contract backlog exceeding $400 million and attracted strong broker support. For defence sector bulls, the question is simple: which stock offers better value from here?

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EOS Wins Contracts While DroneShield Battles Trust Issues

EOS has been busy signing deals in 2025. The company landed a $108 million contract with the Australian Defence Force and an €11.4 million Slinger counter-drone order from a NATO country. Its contract backlog now sits above $400 million, nearly triple where it was at the end of 2024. Most of this work will convert to revenue in 2026 and 2027, giving investors clear visibility on future earnings.
DroneShield’s business is actually performing well. Q3 2025 revenue jumped over 1,000% to $92.9 million, and the company now generates positive cash flow with $235 million in the bank. The problem isn’t the business; it’s the people running it.

Here’s what spooked investors:

– CEO Oleg Vornik sold his entire $49.5 million shareholding
– Chairman Peter James offloaded $12.4 million in shares
– US CEO Matt McCrann resigned suddenly in November

When insiders sell everything, investors get nervous, and rightly so. EOS faced its own issues earlier this year but settled an ASIC investigation for $4 million and moved on. DroneShield is still in damage control mode.

Bell Potter Backs EOS, Calls DroneShield “Dead Money”

The broker divide tells the story clearly.
Bell Potter has a buy rating on EOS with a price target of $8.10, suggesting around 80% upside from current levels. The broker sees EOS as a market leader in counter-drone solutions and believes the EU’s planned “drone wall” along its eastern border could drive significant new orders.
For DroneShield, the same broker recently called the stock “dead money” in the near term. Despite strong fundamentals, Bell Potter believes institutional investors will stay away until governance improves.
There’s also a technology question hanging over DroneShield. Reports suggest its radio-frequency jamming systems may struggle against newer fibre-optic-guided drones being used in Ukraine. While these drones are still a minority, the trend is worth watching.

The Investor’s Takeaway

EOS looks like the better buy right now. The company offers a $400 million contract backlog with multi-year revenue visibility. Management has cleared its regulatory issues and is winning new business. At current prices, analysts see meaningful upside.
DroneShield is a “wait and see” for now. The underlying business remains strong with $200 million in cash and a $2.55 billion pipeline. But the stock won’t re-rate until management proves they’re aligned with shareholders.

Bottom line: Both companies ride the same defence tailwinds, but EOS offers cleaner execution and less baggage. For a 12-month view, we’d pick EOS. DroneShield could be the better long-term play if trust returns, but that’s a big “if” right now.