EOS is a Brisbane-based defence and space technology company developing and selling advanced weapon systems, counter-drone solutions, electro-optic sensors, and laser-based surveillance and space tracking systems. It supplies high-technology systems to militaries and government agencies globally, delivering $128mn of revenue in FY25, which is expected to more than double in FY26.
The stock jumped ~13% last week after announcing they had secured a $175mn Slinger Counter-Drone order and entered into a 50/50 joint venture with UAE defence group Gens to develop and manufacture next-generation high-energy laser weapons and remote weapon systems for the Middle East and North Africa. Gens will contribute US$40m in funding, and both parties are targeting at least US$250m of orders within 12 months, with the venture expected to begin contributing to EOS earnings by 2027–28. This reads well, but the subsequent muted reaction by the $2.2bn defence stock demonstrates an expectation of good news moving forward.
Recent years have witnessed the Russia-Ukraine War, the US-Iran War and overall increased defence spending by Europe and the US. However, we feel, and hope, these tailwinds are mature and the “hot sector” will cool in the coming year (s). Hence, we’re not keen to chase EOS into strength, although it’s a reasonable business which should be profitable come FY27.
- We like EOS as a business but aren’t excited by the risk/reward ~$10.30 at this stage of its evolution.
MM is neutral towards EOS around $10.30
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