On Friday, H.C. Wainwright updated its outlook on Draganfly Inc. (NASDAQ:DPRO), significantly raising the price target to $7.00 from $0.50. The firm maintained a Buy rating on the stock. This adjustment follows Draganfly's announcement on Thursday about receiving a purchase order from Virtual Reality Rehab Inc. for its Commander 3XL and Draganfly Flex (NASDAQ:FLEX) FPV Drones. Virtual Reality Rehab is the prime contractor for this order, which is intended for deployment within the U.S. Department of Defense.
Virtual Reality Rehab Inc. is engaged in various U.S. government projects, including virtual reality training systems and small unmanned aircraft systems. The collaboration with Draganfly will involve integrating Virtual Reality Rehab's swarming technology on various Draganfly platforms, such as the Flex FPV System. Although the initial order is not expected to significantly contribute to near-term revenue, it is considered a step toward scalable deployment.
The partnership with the U.S. Department of Defense is anticipated to potentially increase Draganfly's revenue expectations for 2025. Despite the uncertainty regarding the timing of these developments, Draganfly is believed to be well-positioned, having secured the manufacturing capacity necessary to support large defense contracts.
H.C. Wainwright suggests that the path to profitability for Draganfly will become more evident as the company begins to scale its revenue in the second half of 2024 and into 2025. This growth trajectory could attract new investors to the company's shares. The firm's recommendation for investors is to accumulate a position in Draganfly, anticipating new contract wins, increasing revenue, and eventual profitability. The revised price target of $7.00 takes into account Draganfly's recent 1-for-25 reverse share split.
In other recent news, Draganfly Inc. announced significant developments. The drone solutions developer reported a robust increase in its Q2 2024 earnings, with organic revenue reaching $1.7 million, a 30% surge from the previous quarter, and a gross profit of $461,000. In addition, Draganfly secured approximately $2 million in funding through a unit sale to an institutional investor, with Maxim Group LLC serving as the placement agent.
The company also confirmed its previously announced share consolidation, which will take effect in September 2024, as part of strategic efforts to align its share structure. Furthermore, Draganfly welcomed three new board members, including Thomas Modly, former Under Secretary and Acting Secretary of the U.S. Navy.
In partnership news, Draganfly was chosen by Mass General Brigham for drone delivery programs and signed a distributor in Australia, targeting military applications representing a $20 billion market opportunity. The company's drones were also selected for U.S. Department of Defense deployment, in collaboration with Virtual Reality Rehab Inc.
Despite a challenging market and a working capital deficit of $3.7 million, Draganfly maintains an optimistic outlook for future growth, expecting to reach full production capacity by the end of 2024. These are the recent developments in Draganfly's operations.
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