Mar 26, 2024

Sentiment: Bullish

Type of Trade: Aggressive, High Growth

Industry: Artificial Intelligence

DroneShield provides artificial intelligence systems for C-UAS defense (e.g. Counterdrone protection) against a wide range of UAS threats. Our state of the art detection and counterdrone products aid your site and security forces against the significant and growing threats of UAS.

The company is also focusing on RF sensing, Artificial Intelligence and Machine Learning, Sensor Fusion, Electronic Warfare, Rapid Prototyping and MIL-SPEC manufacturing.

Their capabilities are used to protect the military, government, law enforcement, critical infrastructure, commercials, and VIPs throughout the world. 

Droneshield offers customers bespoke solutions and off-the-shelf products designed to suit a variety of terrestrial, maritime, or airborne platforms.

The company’s products have undergone extensive evaluations from a number of U.S Government agencies in the last several years. The company also had the ability to rapidly deliver DroneShield solutions to its customers during the last 2 years.

The company’s financial performance has improved and has became net profitable in FY23.

DroneShield has recently announced that it has received a repeat order of $4.3 million from a U.S. government customer for a number of its handheld C-UAS systems.

✅ Revenue continue to grow exponentially to $55.1m in FY23. 80% of the revenues are repeat customers.

✅ Cash Receipt Growth: 5x in FY23 to $73.5m

✅ Shift to NPAT – Net profit after tax $9.3m.

✅ Multiple projects in High Quality Government Customer Pipeline, which it doesn’t even includes order issued on short notice from repeat customers.

✅ SaaS Revenue Growth of 4x during 2023 with 41 military projects in US ($231m), 15 projects in Europe ($106m), 4 projects in UK ($23m), 5 projects in Australia ($6m) and 14 projects in Asia ($22).

✅ Favourable macro and geopolitical environment for drone applicability, with rising global conflicts, geopolitical tensions, proliferation of cheap combat, escalation of drone-based offensives, and advancements in AI and autonomous warfare technology.

✅ DroneShield is the only pure-play C-USA publicity listed company globally, providing the C-UAS sector exposure.

🚩 Droneshield competitors selling similar.

✅ DroneShield is world leading proprietary of RF AI Platform for Protection Against Advanced Threats, such as Drones. Drones operates in the densest parts of the Radio Frequency (RF) Spectrum with “noise”coming from all kinds of other emitters, including Wi-Fi, Bluetooth, cell towers, and antennas.

✅ DroneOptID AI Software – Optical and Thermal Spectrum Conterdrone Surveillance.

✅ Cutting-Edge proprietary AI Based software capabilities and Artificial Intelligence in Electronic Warfare.

Technical Analysis

If you had invested DRO 52 weeks ago, your investment would have seen a 126% increase in value today. This surge is attributed to a significant rally witnessed over the past four months, largely driven by government contracts.

Moreover, analysis of the stock’s chart formation reveals a notable pattern: substantial trading volumes accompany upward movements in the stock price, while volumes remain low during downward movements. This pattern strengthens the technical bullish trend observed in the stock.

Recently, we observed a correction of 26% in the stock price, bringing it back to technically fair prices. This correction was primarily attributed to some directors selling their stocks. While directors selling is not typically viewed as a positive fundamental sign, it’s important to note that such actions may be driven by personal reasons rather than indicating any fundamental threats to the company. It’s worth mentioning that the company has a strong outlook for 2024 and 2025, which further supports the notion that the recent correction may have been driven more by individual factors than by concerns about the company’s fundamentals.

The stock price (SP) maintains its position above the Exponential Moving Average 9 (EMA9), indicating a bullish sentiment. This is further reinforced by a bullish intersection at level 2 and the presence of multiple green candles on the Heiken Ashi chart. These indicators suggest a continued upward momentum in the stock’s price trend.

The Simple Moving Average 40 (SMA40) is presently positioned at 66 cents, suggesting that an entry point in the low 70’s range would be considered technically fair. However, it’s crucial to recognize that the Simple Moving Average 250 (SMA250) is notably lower than the SMA40. This discrepancy implies higher risk associated with trading this stock. Investors should exercise caution and conduct thorough analysis before considering any trades, keeping in mind the relative positioning of these moving averages.

Should I Buy (ASX: DRO) Now?

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