The NextDC Ltd (ASX: NXT) share price has been a positive performer on Wednesday.

In morning trade, the data centre operator’s shares are up 4% to $11.45.

Why is the NEXTDC share price charging higher?

Investors have been buying NextDC shares following the release of a bullish broker note out of Goldman Sachs this morning.

According to the note, the broker has reiterated its buy rating, added the company to its conviction list, and lifted its price target to $15.00.

Based on the latest NextDC share price, this implies potential upside of 31%.

What did the broker say?

Goldman Sachs recently hosted a number of data centre meetings with a range of industry participants. These meetings have collectively reinforced its positive view on NextDC.

The broker listed four key takeaways from these events. They are summarised below:

(1) Demand remains very strong, with ‘waves’ of demand to continue but potentially larger and more spaced out than previously, while the quantum of deployments continues to surprise (i.e. individual orders of 20-40MW);

(2) Pricing (and hence returns) remains healthy in Australia across all operators, supporting our return expectations (we forecast 11.3% ROIC on NXT’s S3 facility);

(3) NXT is likely to progress its S4/M4 facility as a JV, away from the CBD, while keeping optionality to undertake a JV for part of M3/S3; and

(4) International is strategically sound, but unlikely to progress while borders are closed.

High multiples are not a concern

While Goldman acknowledges that there are concerns around equity valuations due to rising bond yields, it believes NextDC’s shares are more than deserving to trade at a premium.

Goldman explained: “We note investor concerns around the expected increase in inflation that is impacting equity valuations. However we believe the strong growth outlook for NextDC remains compelling, particularly given its hyperscale contracts have inflation escalators embedded within them.”

“As a result, with NXT having pulled back -23% since its Oct-20 high ($14.10; vs ASX200 +10% ) despite subsequently upgrading FY21 guidance, we see now see a more compelling investment opportunity. With our $15.00 TP implying +36% upside, amongst the highest in our TMTG coverage, we re-iterate our Buy and add NXT to the ANZ Conviction List,” it concluded.

More reading

• Goldman Sachs: “Massive opportunity” in ASX 200 alternative real estate shares
• 2 explosive ASX growth shares to buy right now
• Top broker picks the best ASX shares to buy for the new quarter
• 2 excellent ASX shares to buy and hold for a decade
• NEXTDC (ASX:NXT) share price tipped to charge 28% higher

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. 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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Nothing like acquisitions and spin-offs to liven things up, and leading brokers have just slapped a “buy” on these ASX shares in the corporate action spotlight!

We can thank near-zero interest rates for the pick-up in such activities too. Cheap debt and high share prices are prompting companies to hunt for inorganic opportunities.

Brokers have picked three that they believe will outperform the S&P/ASX 200 Index (Index:^AXJO).

Cleaning up

One ASX share that is grabbing the M&A headlines is the Cleanaway Waste Management Ltd (ASX: CWY) share price.

Cleanaway intends to buy the local operations of Suez Groupe for $2.5 billion. This prompted JPMorgan to reiterated its “overweight” recommendation on the waste management business as it sees the acquisition as a “transformative transaction”.

Acquisition puts the ASX share on the buy list

“We view the transaction as compelling for CWY given Suez’s prized infrastructure assets, in particular the Sydney metro Post Collection assets which has been a material gap in CWY’s national footprint,” said the broker.

“While the transaction is ‘EPS accretive’, we believe there is meaningful valuation accretion as CWY’s overall business mix shifts further to infrastructure-like assets as well as longer duration Municipal contracts.”

However, there’s no guarantee the acquisition will be completed and there’re still questions about the capital structure of the group post the takeover.

JPMorgan’s 12-month price target on the Cleanaway share price is $2.60 a share.

Looking greener and more attractive

One ASX share that caught the eye of UBS is the South32 Ltd (ASX: S32) share price. The broker reiterated its “buy” recommendation on the miner as the sale of its coal asset (SAEC) to Seriti looks imminent.

“In our opinion, the exit of SAEC is still a positive as it makes S32 greener & leaner (removing ~40% of employees & 25% of capex),” said UBS.

“Seriti still assumes SAEC’s $875m closure liability, so the exit is NPV & earnings accretive.”

Capital return is one reason to buy the ASX share

As South32 indicated it doesn’t intend to hold on to the excess cash from the sale, UBS sees a $100 million to $200 million capital return for shareholders once the deal is completed.

Further, the broker anticipates a positive quarterly production update from South32 later this month and has lifted its 12-month price target on the South32 share price to $3.20 from $3.05 a share.

Clear buy signal

Another acquisitive ASX share that’s worth buying is the Codan Limited (ASX: CDA) share price, according to Canaccord Genuity.

The broker repeated its “buy” recommendation on the Codan share price following last week’s announcement that it was buying Zetron Inc. for US$45 million.

“We have upgraded our target price to $17.10 per share ($16.60 previously),” said the broker.

“This is based on an 18.0x FY22e EBIT multiple, which is a 15% premium to the XSO average. We believe a premium is warranted given the above-average EPS growth outlook, and upside risk to earnings.”

Zetron provides critical communications to first responders in rural and regional areas in the US.

More reading

• The Australian economy will recover from COVID-19 this year, says IMF
• 2 ASX sectors where dividend shares will go backwards this year
• 2 great ASX 200 blue chip shares for dividends
• 5 things to watch on the ASX 200 on Wednesday
• Why ASX 200 shares are at a 6-week high

Motley Fool contributor Brendon Lau owns shares of South32 Ltd. 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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The EML Payments Ltd (ASX: EML) share price is charging higher on Wednesday following the announcement of a major acquisition.

In morning trade, the payments company’s shares are up 12% to a record high of $5.75.

What did EML Payments announce?

EML Payments has entered into a binding share purchase agreement to acquire 100% of Sentenial Limited and its wholly owned subsidiaries. This includes its open banking product, Nuapay.

According to the release, the two parties have agreed an upfront enterprise value of 70 million euros (A$108.6 million), plus an earn-out component of up to 40 million euros (A$62.1 million). This will be funded by a combination of 38.9 million euros in cash and 31.1 million in EML Payments shares.

What is Sentenial?

Sentenial is a leading European Open Banking and Account-to-Account (A2A) payments provider, utilising a cloud-native, API-first, full stack enterprise grade payment platform.

The release notes that it has an attractive customer base across banking, corporate, and software industries. This includes 4 of the top 7 banks in the United Kingdom and some of the largest merchant acquirers in Europe.

Its Nuapay business is one of only a few Open Banking products in the marketplace. It provides merchants and payment service providers with a feature rich Open Banking solution, including interwoven money movement capabilities, reconciliation, and batch settlement of transactions.

Why acquire Sentenial?

The company sees the combination of the EML and Nuapay platforms and capabilities as an opportunity to deepen customer relationships, enter new industry verticals, and diversify its revenue streams.

Management also notes that the acquisition broadens the company’s payment offerings to include alternate (non-card, non-scheme) payment products to its platform. This addresses customer demand and complements card scheme-based payments.

Another positive is that Sentenial has a highly scalable platform that has had continual investment to future proof the business and allow for agile deployments and rapid growth. In light of this, EML Payments believes it is well positioned to export the technology globally and has plans to leverage the Sentenial platform into Australia and North America within the next 12-18 months.

Once the acquisition completes, the combined group is expected to process in excess of A$90 billion in Gross Debit Volume (GDV) in FY 2022.

Management commentary

EML’s Managing Director & Group CEO, Tom Cregan, said: “EML has transitioned over the years from primarily a gift-card company to a company with a diverse revenue base across multiple prepaid products. The acquisition of Sentenial will be the next evolution for EML, as we transition into a broader payments business by adding instant account-to-account (Open Banking) payments into our suite of solutions for current and prospective customers.”

“EML supports thousands of prepaid programmes globally, and our platform is how our customers interact with us. Sentenial operates an enterprise-grade payments platform processing over 45 billion Euro per annum, and it’s, therefore, a similar business to EML but servicing a different customer set with different payment types. The net result of bringing the companies together allows EML to increase our Total Addressable Market by expanding our product suite, and we see a number of opportunities to cross-sell Account to Account payments into existing EML customers, and vice versa.”

More reading

• 3 ASX shares to buy in April 2021
• 2 compelling ASX payment shares to buy
• 2 ASX shares delivering irresistible growth
• Why did the Afterpay (ASX:APT) share price and 2 other BNPLs fall today?
• Is the EML (ASX:EML) share price a top buy right now?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended EML Payments. 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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 The Australian economy’s growth has been forecast to increase more than was first predicted for 2021. The International Monetary Fund (IMF) updated its 2021 global economic growth forecast yesterday. It has increased Australia’s expected GDP growth to 4.5%.

This means Australia could recover from the pandemic-spurred economic downturn this year, after GDP shrunk by 2.4% in 2020.

Beyond Australia, the global economy is projected to grow 6% in 2021.

IMF’s prediction of the Australian economy’s future

Australia’s economy looks like it could be steadying after a turbulent 2020.

At the time of writing, the S&P/ASX 200 (ASX: XJO) has bounced 31.1% since this time last year.

The Reserve Bank of Australia is still holding the official cash rate at 0.1%. It’s not expected to be lifted until at least late 2023.

According to the Sydney Morning Herald, RBA’s governor Philip Lowe has said it won’t increase interest rates until inflation was between 2% and 3%. The IMF predicts Australia will reach 2% inflation in 2024.

Future IMF predictions state Australia’s GPD growth may slow in the coming years. It’s estimated our GPD growth will be 2.8% in 2022, 2.3% in 2023 and 2.2% in 2024.

For comparison, between 2013 and 2019 Australia’s GDP growth stayed between 2.1% and 2.8%.

Simultaneously, our housing prices are increasing exponentially. Motley Fool Australia’s Scott Phillips spoke of Australia’s increasing house prices on Sky News First Edition yesterday.

Global growth forecast

The IMF predicts the economies that suffer most in the coming years will be those of low-income nations.

It also predicts the global economy will grow by 6% in 2021, seemingly led by those hit hardest by the coronavirus pandemic.

India is among the economies the IMF forecasted would have the highest growth in 2021. It is predicted to grow by 12.5%, recovering from its drop of 8% in 2020.

The United Kingdom’s GDP is predicted to bounce back from its 5.3% drop in 2020 to grow by 9.9% in 2021.

The United States’ economy wasn’t hit as hard as others in 2020. Its GDP is predicted to overcome its 3.5% fall by rising 6.4% in 2021.

Finally, China’s GDP saw a drop similar to Australia’s in 2020, falling by 2.3%. Though, the IMF predicts it will experience an 8.4% growth in 2021.

More reading

• 2 ASX sectors where dividend shares will go backwards this year
• 2 great ASX 200 blue chip shares for dividends
• 5 things to watch on the ASX 200 on Wednesday
• Why ASX 200 shares are at a 6-week high
• Why the Webjet (ASX:WEB) share price closed 5% higher today

Motley Fool contributor Brooke Cooper 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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The Westpac Banking Corp (ASX: WBC) share price is edging lower following the release of an announcement.

At the time of writing, the bank’s shares are down 0.1% to $24.67.

What did Westpac announce?

This morning the banking giant confirmed that the Australian Prudential Regulation Authority (APRA) has approved its Integrated Plan that was developed in response to the Enforceable Undertaking. The latter followed an investigation by the financial crime watchdog AUSTRAC into alleged breaches of anti-money laundering and counter-terrorism financing laws.

Under the terms of the Enforceable Undertaking, which Westpac entered into on 3 December 2020, Westpac was required to submit for APRA approval a detailed integrated plan that outlines all major remediation activities related to risk governance.

In addition to this, the plan was required to have clear timelines and specify who is accountable for delivery. It also outlines commitments designed to strengthen all aspects of Westpac’s risk governance across both financial and non-financial risk.

What else?

Management notes that another requirement of the Enforceable Undertaking is that the integrated plan is independently assured.

In response to this, Westpac appointed Promontory Australasia to provide quarterly assurance and intends to release their reports bi-annually. The first report for the period up to 1 March 2021, has been released today. You can read about it here.

In the report, Promontory Australasia acknowledges the completeness of Westpac’s integrated plan, as it expands on its existing Customer Outcomes and Risk Excellence (CORE) Program. The consulting firm also notes that appropriate governance and accountability structures are in place to support effective implementation of the plan.

Westpac’s CEO, Peter King, said: “Our Integrated Plan outlines a comprehensive program of work to ensure the bank’s risk culture and risk governance meet the high standards expected of us. We have made progress on improving our management of risk over the past 12 months, however there is much more work to do to ensure sustainable change. The implementation of our Integrated Plan is a critical part of delivering on our Fix, Simplify, Perform strategic priorities and is one of my top focus areas.”

More reading

• Top broker picks the best ASX shares to buy for the new quarter
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• Commonwealth Bank (ASX:CBA) share price and weekly news wrap

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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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If you’re wanting to boost your portfolio with a couple of growth shares, then you may want to consider the ones listed below.

Here’s why these ASX growth shares have been rated as buys:

Nearmap Ltd (ASX: NEA)

The first ASX growth share to look at is Nearmap. It is a leading aerial imagery technology and location data company with operations in the ANZ and North American markets.

Nearmap gives businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. This means that users can inspect, measure, or analyse locations from anywhere, which turns high-definition aerial map data into a powerful project management tool.

Management believes it has a large addressable market to grow into and is targeting annualised contract value (ACV) growth of 20% to 40% per annum over the long term.

One broker that appears confident in its growth trajectory is Goldman Sachs. It currently has a buy rating and $2.95 price target on Nearmap’s shares. This compares to the latest Nearmap share price of $2.18.

Zip Co Ltd (ASX: Z1P)

Although 2021 has been an amazing year for the Zip share price, the last seven weeks have been anything but that. After peaking at $14.53 in the middle of February, the Zip share price is now trading 42% lower at $8.42. And that’s even after a stunning 9% gain on Tuesday following a rebound in the tech sector.

One broker that appears to see this as a buying opportunity for investors is Morgans. Its analysts currently have an add rating and $12.10 price target on the company’s shares. Based on the latest Zip share price, this implies potential upside of almost 44% over the next 12 months.

It appears to have been pleased with its first half performance, which saw Zip report a 141% increase in total transaction volume to $2.32 billion and a 130% jump in revenue to $160 million. This was driven by a 217% increase in global active customers to 5.7 million, thanks largely to its rapidly growing US-based QuadPay business.

More reading

• Insiders have been buying Nearmap (ASX:NEA) and this ASX share
• ASX 200 up 0.9%: Cleanaway jumps, tech shares rise, Incitec Pivot sinks
• Why the IOUpay (ASX: IOU) share price tumbled 40% in March 
• Afterpay (ASX:APT) leads Zip by 40% on one critical measure
• These were the best performing ASX 200 shares in the Q1 of 2021

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. and ZIPCOLTD FPO. The Motley Fool Australia has recommended Nearmap Ltd. 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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March marked the third consecutive month-on-month decline for the Kogan.com Ltd (ASX: KGN) share price. With its shares bouncing 8% higher so far in April, is it time for Kogan shares to make a comeback? 

What’s driving the Kogan share price lower? 

Diverging performance between retail and ecommerce shares 

Classic ASX retail shares such as JB Hi-fi Ltd (ASX: JBH), Harvey Norman Holdings Limited (ASX: HVN) and Adairs Ltd (ASX: ADH) are within an arms reach of all-time record highs. This comes off the back of a significant rebound in 2020 and a relatively stable performance so far in 2021. 

Conversely, ecommerce enabled businesses such as Kogan, Temple & Webster Group Ltd (ASX: TPW), Mydeal.com.au Pty Ltd (ASX: MYD) and Redbubble Ltd (ASX: RBL) have logged negative returns across the board this year. 

Why are ASX ecommerce shares underperforming? 

Ecommerce businesses might be able to grow faster than traditional retail, but these companies typically fetch a much higher valuation. 

This leads to the issue in March, which witnessed a significant underperformance in growth and tech-related sectors, largely driven by a surge in bond yields. The S&P/ASX200 Info Tech (ASXINDEX: XIJ) fell 5.80% in March compared to the flat performance of the ASX 200 and outperformance in sectors such as financials. 

Many ecommerce shares fetch a tech like valuation, which is the case for Mydeal, a loss-making business. As well as Redbubble and Temple & Webster, which both recently started to turn a small profit. 

While the Kogan business might be kicking goals, it’s likely swimming against the tide as tech-related shares came under pressure. 

What’s the outlook for the Kogan share price? 

The outlook from Kogan’s half-year results was positive, noting that unaudited management accounts show that gross sales, gross profit, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was up 45%, 102% and 90% respectively. The company plans to further expand its exclusive brands, develop its Kogan Marketplace and complete the integration of Mighty Ape. 

The most recent broker updates for the Kogan share price date back to 1 March from UBS and Credit Suisse. 

UBS reaffirmed a more cautious view on the 12-month outlook as trading might have slowed. It points to key risks being the accelerated investment in online channels by traditional bricks and mortar retailers. As a result, the broker retained a neutral rating and a $15.10 target price. 

Credit Suisse was more bullish and positive on the company’s medium to long term growth prospects. It was pleased with the growth in Kogan’s private label revenue and sees it as an important component of the business’ value proposition. The broker retained an outperform rating with a $20.85 target price. 

The Kogan share price is currently hanging around 10-month lows of $13.03. 

More reading

• 2 major ASX retail shares trading near record highs
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• 2 fast-growth ASX tech shares that have been sold off
• 2 quick-growing ASX dividend shares to buy

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended ADAIRS FPO and Temple & Webster Group Ltd. 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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The party may not be over for the Woolworths Group Ltd (ASX: WOW) share price as JPMorgan upgraded the supermarket giant.

The upgrade means that the Woolworths share price could soon be re-testing last February’s record high of $43.45.

The ASX share has outperformed its archrival. The Coles Group Ltd (ASX: COL) share price has been virtually flat over the past year when the Woolworths share price jumped nearly 14%.

The gain isn’t as impressive as the Metcash Limited (ASX: MTS) share price, which rallied 31% over the period.

Woolworths share price could reach new highs

But the Woolies share price may not have peaked, according to JPMorgan. The broker lifted its recommendation on Woolworths to “overweight” with a 12-month price target of $45 a share.

“Woolworths is likely to sustain market share gains at the expense of Coles due to the tailwinds of local, which could last longer than expected, and online, a structural growth opportunity,” said JPMorgan.

“Coles could accelerate online investment at the expense of dividends but this is unlikely.”

Technology provides sustainable edge

This personally reminds me of how the Commonwealth Bank of Australia (ASX: CBA) share price outruns the other ASX big banks over the long-term.

CBA has a technology edge as it invests more in IT, and that is one of the key reasons why it can keep ahead of the pact over the many years.

But there are three other reasons why JPMorgan is bullish on the Woolworths share price.

Three other reasons to buy the Woolworths share price

First is Woolworths ability to leverage on the Food and Everyday Needs ecosystem. The supermarket giant enjoys superior economies of scale in its food business and can generate incremental revenue streams with not much investment.

Then there is the potential turnaround of its Big W department store business. There are early signs that the struggling business has turned a corner after years of lacklustre performance.

Finally, JPMorgan points to the expected sale of its drinks and hotels division, Endeavour Group.

Not only will the divestment mean a potential capital return for investors who are eagerly eyeing the $2 billion plus of franking credits on Woolies’ balance sheet, but cutting Endeavour Group is likely to drive increased demand in the Woolworths share price from ESG-focused investors.

Talk about a double win!

More reading

• Beat low rates with these quality ASX dividend shares
• Lynch Group (ASX:LGL) share price falls after completing $206 million IPO
• These are the 10 most shorted shares on the ASX
• 2 ASX dividend shares to buy this April
• Commonwealth Bank (ASX:CBA) share price and weekly news wrap

Motley Fool contributor Brendon Lau owns shares of Commonwealth Bank of Australia and Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. 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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Little-known New Zealand-based tech company Eroad Ltd (ASX:ERD) has had an interesting first few months on the ASX. The company’s shares only began trading on the ASX in September. At the time, the Eroad share price was trading around $4 before it surged as high as $5.19. However, by January it has fallen off again. They have now shed almost 15% of their value. Currently, they are trading back at $4.40, giving the company a modest market cap of $360 million.

Company Background

The company develops tracking technology for the freight and logistics industries. Eroad’s telematics systems help companies oversee and manage their vehicle fleets. In addition, the systems also provide individual drivers with feedback and coaching to improve safety and performance. Eroad’s technology can even help companies manage their fringe benefit tax and fuel tax credit obligations.

Eroad’s Financial Performance

In the company’s most recent financial results for the six months ending 30 September 2020 it reported a 19% jump in revenues versus the prior comparative period (to NZ$45.8 million). Earnings before interest, tax, depreciation and amortisation expenses (EBITDA) increased 29% to NZ$15.3 million, but was flat against the prior half due to accelerating investment in research and development.

The company was impacted by COVID-19 lockdowns during the period, with sluggish growth across both Australia and North America. However, in Eroad’s home market of New Zealand, the effects from coronavirus were less severe. New Zealand revenues jumped by 13% half-on-half to $27.4 million.

Recent News

Eroad recently released an operational update for the December quarter. In it, the company reported that it had sold an additional 1,284 contracted units during the period. This reflects growth in New Zealand and Australia. Total Australian units increased by 10% quarter-on-quarter, outpacing growth in New Zealand (albeit off a much smaller base) with most sales made to small to medium-sized businesses. Eroad has stated that it is now targeting larger enterprises in Australia. In addition, the company hopes to land at least one major contract in the fourth quarter.

However, there continue to be significant headwinds in the North American market, with contracted unit numbers there declining slightly during the quarter.

Outlook for Eroad

Despite continuing challenging conditions in North America, Eroad anticipates a slight increase in revenues for the second half. EBITDA should come in roughly equal to the first half, reflecting the company’s continued investment in product development and marketing.

Eroad does forecast a strengthening growth runway over the next few years. It believes the rate of revenue growth will start to increase during FY22, but continued R&D investment (at a rate of around 24% to 27% of FY22 revenues) should accelerate growth even faster in FY23 and FY24. That could mean Eroad will be an ASX tech company to watch over the next few years.

More reading

• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Rhys Brock 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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DroneShield Ltd (ASX: DRO) shares could be on the move today following the company’s latest announcement regarding a new government contract. At yesterday’s market wrap, the DroneShield share price finished the day flat at 16 cents.

Let’s take a closer look and see what the drone security company updated the ASX with.

New government contract

According to this morning’s release, DroneShield received a follow-up order from a high-profile government customer from 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 $1.1 million, represents ongoing commitments from government agencies, which have sought DroneShield products in the past. Just yesterday, the company announced that a US law enforcement agency purchased a mobile system of two passive/non-emitting UAS detection sensors.

The new contract is an addition to previous orders made by the high-profile government customer earlier last month. Both parties are holding discussions for future orders.

Droneshield expects to receive the customer receipts for this contract during the current quarter (Q2 FY21).

Word from management

DroneShield CEO Oleg Vornik commented:

This rapid sequence of increasing repeat orders is precisely the right position to be in our industry, following initial lengthy periods of educating the end users on the merits of our offering and undergoing military and Government procurement processes.

This is a testament to the world class performance of the DroneShield products, and strongly positions us as these end users are commencing larger deployments of counter-UAS systems.

DroneShield share price review

DroneShield shares have catapulted in the last 12 months, flying close to 50% higher. However, the Droneshield share price has dropped around 5% year-to-date, with volatility over the past 6 months driving a price range from 21 cents to 15 cents.

Based on valuation grounds, DroneShield commands a market capitalisation of roughly $62.3 million, with 389.8 million shares outstanding.

More reading

• DroneShield (ASX:DRO) share price rises on new customer order
• Droneshield (ASX:DRO) share price moving on multiple product orders
• Here’s why the DroneShield (ASX:DRO) share price is flying 8%

Motley Fool contributor Aaron Teboneras 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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