2026 will be the 'Year of the Drone': Buy DroneShield shares

DroneShield Ltd (ASX: DRO) shares are falling again on Thursday.

At the time of writing, the counter drone technology company's shares are down 3% to $2.40.

While this is disappointing, Bell Potter thinks that it has created a buying opportunity for investors and is urging them to buy its shares ahead of the "Year of the Drone" in 2026.

What is the broker saying?

Bell Potter was pleased with news that DroneShield has won a $49.6 million contract from a European military end-customer.

It believes this means that 24% of its 2026 sales estimates are now secured. The broker said:

DRO has received a contract valued at A$49.6m from a European military endcustomer, with the product to be distributed via an in-region reseller. The contract is for handheld counter-drone (C-UAS) systems, associated accessories, and software updates. DRO has a large portion of this stock on-the-shelf and expects to complete all deliveries in 1Q26. Cash payments are also expected to be fully received in 1Q26. DRO has received 15 contracts from this reseller totalling over $86.5m.

This repeat order represents the company's second largest contract in its history and highlights the urgent need for counter-UAS technologies in Europe. Following this announcement, we estimate that our CY26e Hardware revenue forecast (excl. subscription) of $271m is 24% secured by announced contracts, noting DRO typically delivers product faster than traditional defence contractors.

DroneShield shares tipped for big returns in 2026

According to the note, Bell Potter has retained its buy rating on DroneShield's shares with a trimmed price target of $4.40.

Based on its current share price, this implies potential upside of over 80% for investors over the next 12 months.

Bell Potter believes that 2026 is going to be a big year for DroneShield, potentially making now an opportune time to invest. It said:

We believe DRO has a market leading RF detect/defeat C-UAS offering and a strengthening competitive advantage owing to its years of battlefield experience and large and focused R&D team. We expect 2026 will be an inflection point for the global counter-drone industry with countries poised to unleash a wave of spending on RF detect and defeat solutions. Consequently, we believe DRO should see material contracts flowing from its $2.5b potential sales pipeline over the next 3-6 months as defence budgets roll over to FY26e.

The post 2026 will be the 'Year of the Drone': Buy DroneShield shares appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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