Red Cat Holdings is poised to capitalize on intense demand for drones, particularly in the U.S., which could catapult its shares much higher, according to Roth Capital Partners. The investment firm initiated coverage of the drone name with a buy rating. It also put a $25 price target on shares, implying 72% upside from Friday's close. "The company is well positioned for breakout growth from an expanding drone portfolio and intense demand," analyst Craig Irwin said in a note to clients. " The production footprint is designed for $1 billion in revenue vs. the 2026 guide of $150-$180 million. The [Department of Defense] and allies' procurements give visibility for potential upside." Shares of the Puerto Rico-based drone software and products provider have surged 144% over the past year as the DoD signaled interest in investing in airborne defense technology. RCAT 1Y mountain Red Cat Holdings' stock is up 144% over the past 12 months. President Donald Trump signed an executive order called "Unleashing American Drone Dominance" last year, with the aim of accelerating drone production in the U.S. and making the aerial vehicles part of the National Airspace Program. U.S. lawmakers are also weighing whether to raise the Defense Department's budget in fiscal 2027, which could put more money into the pockets of drone-focused firms , among other defense technology players. Dealmaking could increase Red Cat's exposure to the Department of Defense's initiatives, potentially serving as a catalyst for the stock in the near future, according to Roth. Earlier this year, Red Cat completed its acquisitions of Apium Swarm Robotics and Quaze Technologies , according to a pair of statements published on the company's website. "Growth in 2026 should drive gross margin expansion toward management's 30% targets, but we expect near-term spending to prioritize growth over EBITDA profitability," Irwin added. Roth's call is in line with consensus on the Street. All five analysts covering Red Cat have a buy or strong buy on the stock, LSEG data shows.
<small>Source: CNBC</small>
