Stock of the Day / Stock of the day: DroneShield (DRO)

Key points:

Bell Potter lifts DroneShield (ASX:DRO) price target to $5, citing global drone trendsPhil expectats flattened returns after last year’s rallyManagement’s large-scale sell-down signals caution to PhilHoward highlights shareholder dilution and recommends investors avoid DroneShield

Bell Potter highlights DroneShield (ASX:DRO) as a key focus following its recent report, which describes 2026 as the 'year of the drone'. Noting significant developments in global drone warfare—most notably losses in the Russia-Ukraine conflict and the US Department of Defense plans to acquire 340,000 small drones—Bell Potter raises its price target for DroneShield by 13% to $5. The broker cites potential growth from the US public safety market, especially due to major events like the FIFA World Cup and the 250th anniversary of US independence.

Philip Pepe states that while DroneShield surged 300% last year, he does not expect a similar rally this year. He points out the significant sell-down by management, with the CEO and a key executive offloading their entire holdings, which Phil interprets as a strong signal. While maintaining a buy rating and a $5 price target, Phil believes the stock has reached fair value and prefers a measured approach rather than aggressive buying.

Howard Coleman remains unconvinced of DroneShield’s investment merit despite agreeing that demand for drones and countermeasures will rise. Howard points to heavy shareholder dilution over the past decade and questions the efficacy of the business model, ultimately recommending an outright avoidance of the stock.