DroneShield shares tumble after Jefferies downgrade and margin worries

Australian drone‑defense firm DroneShield Ltd saw its share price plunge amid a sharp analyst downgrade and concerns over weakening margins. Jefferies cut the company's target price by 27% to A$2.05 and lowered its revenue and earnings forecasts, prompting a rise in short‑interest that has climbed to about 28.75% of outstanding shares. The stock fell 5.5% in a single trading session to A$1.28 and is down nearly 30% year‑to‑date.

In the same period DroneShield reported record first‑half‑year 2026 revenue of A$125.8 million, a 74% increase year‑on‑year, and announced a new European contract worth A$23.2 million with reseller COBBS BELUX BV for a military customer. However, the company's gross margin slipped to roughly 60% from 65% due to a shift in product mix, currency effects and higher costs linked to a new production facility and ERP system. The market reacted cautiously, with the share price dropping 13.2% to A$1.81 on the day of the results. An ongoing ASIC investigation into the firm adds further uncertainty to its valuation.