ELECTRO OPTIC SYSTEMS HOLDINGS LIMITED (EOS)
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12/10/2026

1

Buy

$13.80

51.32%

Electro Optic Systems announced an agreement with the government of a Middle East Gulf state for a nationwide counter-drone C-UAS defence system, valued at GBP370m or circa $700m.

As noted by Bell Potter, this is the largest contract ever secured with management expecting over 80% of contract revenue to be earned over the first 12-24 months after the contract being unconditional.

Conditions include provision of a GBP37m performance bond, secured by a GBP40.3m cash security deposit, posted by Electro in August, as well as GBP74m bank guarantee, matched by an advance payment paid by the customer.

The analyst is not concerned by the export licence terms and believes the company can move to implementation of the contract in early 2027.

Target price rises to $13.80 from $12.60. No change to Buy rating. EPS forecasts are upgraded 946% for 2027 and 94% for 2028.

FORECAST
Bell Potter forecasts a full year FY26 dividend of 0.00 cents and EPS of 2.30 cents.
Bell Potter forecasts a full year FY27 dividend of 0.00 cents and EPS of 14.50 cents.

13/10/2026

1

Buy

$17.00

86.40%

Canaccord Genuity maintains a Buy rating for Electro Optic Systems with its target price increased to $17.00 from $15.00 following the award of a GBP370m nationwide counter-drone defence system contract to a Middle Eastern Gulf state.

The analyst notes the transformational agreement represents the largest in the company's history, driving total order backlog to a record $1.3bn and providing unprecedented revenue visibility over the next two years.

While upfront purchases of third-party effectors and interceptors will require a -$100m working capital investment and dilute gross profit margins to approximately 30%, the delivery phase is expected to generate 20% EBITDA margins.

Canaccord Genuity anticipates limited impacts to FY26 results but lifts FY27 and FY28 EBITDA forecasts by 157% and 152% respectively as more than 80% of the contract value is delivered over the initial 12 to 24 months.

Despite the stock declining -12% over the previous two trading days on cash conversion concerns, Canaccord Genuity views the near-term working capital requirements as standard for an accelerated expansion phase and highlights the material step-change in the broader counter-drone strategy.