πππThe drone industry is set for explosive growth, thanks to 3 executive orders signed by President Trump. These orders are aimed at accelerating drone development, enhancing airspace security and promoting domestic drone manufacturing. They also focus on expanding Beyond Visual Line of Sight (BVLOS) operations, strengthening counter drone defenses and reducing reliance on foreign drone manufacturing.
Among the standout players are Kratos Defense, EHang Holdings and AeroVironment. Each of them are positioned uniquely within the expanding drone ecosystem. But are these stocks overvalued or undervalued and where does the real potential lie? Let's break it down.
Kratos Defense And Security Systems (KTOS)
$Kratos Defense & Security Solutions(KTOS)$ is a leader in military drones. It has secured major defense contracts and is developing autonomous combat drones.
Kratos' customers include the US Federal government, foreign governments, commercial enterprises and state and local government agencies.
Kratus share price has been on a tear this year as it up almost 49% year todate. In 2024, it has jumped 92%.
Kratos has delivered an excellent Q1 25 earnings report with revenue up 9.16% to USD 302.6 million. Its net income is USD 4.5 million, up 246% from previous year quarter. Diluted EPS is 0.03 cents, up 200%. Net profit margin is 1.49%, up 217% from previous year quarter.
Analyst Consensus is a Buy, Average Target price is USD 38.00 according to Tipranks.
EHang Holdings
$EHang Holdings Ltd(EH)$ is a pioneer in autonomous aerial vehicles. It is expanding its passenger drone operations globally with strong growth potential in urban air mobility.
EHang is based in Guangzhou China and is the world's leading urban air mobility (UAM) technology platform company. Its mission is to enable safe, autonomous and eco friendly air mobility systems accessible to everyone.
Performance wise, EHang is up 8.4% year todate and in 2024, EHang has risen almost 10%.
EHang is not yet profitable but Wall Street Analysts have given a Buy rating, Average Target price of USD 26.88, an upside potential of 58%.
AeroVironment (AVAV)
$AeroVironment(AVAV)$ specialises in tactical unmanned aircraft. AeroVironment supplies high tech drones for defense and commercial applications, making it a key player in the industry.
Performance wise AeroVironment is up 21% year todate but down 7% in 2024.
AeroVironment reported its Financial results for fiscal 3rd quarter 2025 in March 4 2025. Its Q3 revenue of USD 167.6 million was down 10% year over year. It also incurred a Q3 net loss of USD 1.8 million and non GAAP adjusted EBITDA of USD 21.8 million.
AeroVironment said that they faced a number of short term challenges in the quarter including unprecedented high winds and fires in Southern California.
However AeroVironment booked a record Switchblade and Jump 20 orders which expanded their order backlog to a record USD 764 million. AeroVironment also announced a new Utah manufacturing facility. This is more than double its current Switchblade capacity and provide resiliency against regional weather events.
Wall Street Analysts are bullish on AeroVironment with a Buy rating, Average Target price of USD 203.00, an upside potential of 7%.
Concluding Thoughts - The Drone Revolution is Here
The drone industry is no longer a futuristic concept. It is happening right now. With advancements in urban air mobility, military applications and commercial logistics, companies like Kratos Defense, EHang Holdings and AeroVironment are paving the way for next generation transportation.
The long term potential for drones in multiple industries remain undeniable. Investors who are willing to ride the wave of innovation may find massive opportunities in this rapidly evolving sector.
Will drones dominate the skies and reshape industries? I believe they will and the momentum is here!
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