Ondas Holdings Signals a Rebound as Drone Demand Soars
Ondas Holdings’ (NASDAQ: ONDS) stock price correction was merited; however, the selling is likely to be over, and a robust rebound lies ahead. The correction was warranted because this early-stage growth company has yet to prove itself fully, its stock price had advanced 1000%, and there are execution risks. However, the outlook is robust because the autonomous-drone-in-a-box market approach and DoD-compliant platform are in demand from defense and commercial vectors, driving outperformance and strengthening the outlook. As it stands, this small-cap drone company is on track to grow at a hyper pace over the next three to five years, and the estimates are likely to be conservative.
Not only does the business provide industry-leading drone technology, but it also offers the package across two platforms. The Optimus is designed for fully-automated monitoring and data capture applications, while the Iron Drone Raider is a drone-on-drone platform for defense and counter-drone operations. Among the drivers for growth are the platform's ease of use, deployment, and scalability.
Ondas Outperforms in Q3, Issues Wow-Quality Guidance
Ondas is still a small company, as evidenced by its $10.1 million in net revenue. However, revenue is up nearly 600% year-over-year, with a robust double-digit sequential gain, driven by demand for its autonomous drone systems. More significantly, the revenue outperformed the consensus estimate reported by MarketBeat by more than 4,000 basis points, underscoring the strength of demand and the cautious tone of analysts' forecasts.
Margin news is also good. The company widened its gross margin significantly due to increased revenue leverage, offsetting the impact of growth pains. Losses widened due to several factors, including one-offs, non-cash impairments, and increased costs, but were controlled and remained far below expectations. The 3 cents in GAAP losses came in 2 cents better than expected and is compounded by the guidance.
Ondas' guidance is wow-quality. The company lifted its forecast for the current year and issued an outlook for next year that is well-above the consensus estimates. The outlook for this year, as of mid-November, is revenue of at least $36 million, above the $27 million consensus, and next year's forecast is more robust. The company expected revenue to grow by more than 200% and to outpace the consensus forecast by $32 million, or 4,100 basis points.
Analysts and Institutional Trends Indicate Accumulation for ONDS Stock
The analyst and institutional trends indicate these market segments are accumulating the stock. The institutions own only 38% of the stock in November but has bought robustly at a pace of approximately $17 for each $1 sold over the preceding 12 months. That activity is compounded by analysts’ coverage, which is rapidly increasing and indicating a Moderate Buy, and by the price target trend, which is rising. The consensus forecasts a 10% upside from critical support levels, but the trend points to the high end of the range and a fresh all-time high for this stock.
The technical trends also reveal an accumulating market. The price action is trending higher, driven by increasing volume, having moved above the cluster of EMAs, which are showing a conspicuous Golden Crossover. The Golden Crossover is a strong signal of a shift in market dynamics and a high likelihood of price action trending higher. The market for ONDS could retest recent highs before year-end in this scenario, potentially reaching new highs in early 2026.
