Is DroneShield a Buy or Sell After Securing an A$8M Contract?

Droneshield is on the comeback with an AUD $8 million contract win

With much of the panic among DroneShield (ASX:DRO) investors now easing, our recent coverage has focused on the underlying fundamentals of the business, which we believe remained intact throughout the sell off.

The sharp decline in the share price created an opportunity for investors willing to take on risk, although we acknowledge that doing so was psychologically difficult given the uncertainty caused by management and internal issues. Sentiment has since begun to improve. Over the past month, the stock has rebounded by 66%, supported by renewed contract momentum.

DroneShield recently secured an A$6 million contract, followed by an additional A$8 million contract announced today. These wins reinforce the company’s commercial traction and suggest that confidence in the business is gradually returning.

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What does 2026 hold for DRO

The latest contract, valued at A$8 million, was awarded by a Western military government department, with delivery expected by the end of 2025 and into early Q1 2026. Based on our review of all announcements since the last quarterly update, backlog revenue for calendar year 2026 now stands at A$98 million.

Using conservative, back-of-the-envelope assumptions, including the contribution from this contract and accounts receivable carried over from the previous quarter, we estimate Q1 2026 revenue could fall in the A$60 million to A$70 million range.

Importantly, this represents an all-time high backlog for the company entering a new calendar year. The revenue is already contracted rather than speculative, providing a high level of visibility.

Over the past seven years, DroneShield has secured 38 contracts through this reseller, with a total historical value exceeding A$10 million. This long standing relationship adds further confidence around execution and repeat business.

Is DRO a buy or a sell

Two analysts currently rate DroneShield as a Buy, with price targets of around A$5, implying approximately 42% upside from current levels. In our view, the shift in sentiment when the share price moved toward A$2 marked a compelling point for investors to re-examine the company and its fundamentals. Which we wrote about in November.

For growth-focused investors who are comfortable taking on higher risk and believe in the company’s long-term potential, the stock may still be worth considering. However, for more conservative investors, we believe it is prudent to wait for further clarity and updates around internal operations and execution before committing new capital.