Why the DroneShield (ASX:DRO) share price jumped 12% this morning

Investors appear to be excited about the company's latest deal…

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The DroneShield Ltd (ASX: DRO) share price is taking off today after the company announced it has received a new $3.8 million defence contract.

In morning trade, DroneShield shares rocketed 12.12% higher to 18.5 cents apiece before partially retreating. At the time of writing, the company's shares are swapping hands for 17.25 cents each, up by 4.55% for the day so far.

New defence contract

Investors are buying up DroneShield shares after the company updated the market with a positive release.

According to the statement, DroneShield has received a 2-year defence contract with a Five Eyes country. The term 'Five Eyes' relates to a signals alliance between the United States, Canada, Australia, the United Kingdom, and New Zealand.

The deal, valued at about $3.8 million, represents ongoing commitments from government agencies, which have sought DroneShield products in the past.

DroneShield said the agreement contains the usual customary clauses of a research and development contract. It is expected around $2 million of the contract's value will be collected during the June and September 2021 quarters.

DroneShield CEO Oleg Vornik said, "This contract is testament to the world-leading capabilities of the DroneShield team".

What does DroneShield do?

DroneShield specialises in drone security technology. The company designs and develops detection systems that use specialised technology to protect people, organisations and critical infrastructure from drone incursions.

Specifically, its multi-layered products are centred around detection and disruption from unmanned aerial systems.

DroneShield share price summary

Over the past 12 months, DroneShield shares have been recovering from the fallout of COVID-19. After hitting a 52-week low of 10 cents in July last year, the company's share price has lifted by around 70%. However, DroneShield shares are still some way off their 52-week high of 25 cents achieved in September.

DroneShield has a market capitalisation of around $69 million. The company holds more than 389 million shares on its registry.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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