Ondas Inc. currently has a stock price of $10.64 as of February 2. The company is focused on providing private wireless, drone, and automated data solutions both in the U.S. and internationally. It primarily targets the sectors of defense, public safety, and critical infrastructure. Ondas is actively developing advanced drone technologies, counter-drone systems, ground robotics, and mission-critical networks, which positions it well in the rapidly evolving defense and security landscape.
The bulk of Ondas’ revenue comes from its Autonomous Solutions (OAS) division, which has grown significantly through acquisitions, including American Robotics and Airobotics. This division enables the company to offer around-the-clock autonomous surveillance and defense applications, catering to various industrial sectors like oil, gas, mining, and agriculture, as well as military and government clients.
Another division, Ondas Networks (ON), specializes in licensed private communications networks for crucial applications, although its revenue contribution is relatively minor. The company is working to modernize North America’s rail communication systems through a partnership with Siemens Mobility, although it faces some challenges due to outdated legacy systems. Still, the long-term growth potential is viewed favorably.
Ondas stands to benefit from strong trends, such as the U.S. government’s planned increase in drone purchases and ongoing defense spending, coupled with industrial upgrades in critical networks. Yet, challenges persist, including regulatory issues, competition, and dependency on concentrated contracts. Financially, the company is still in a growth phase, showing negative revenue but with a strong cash position of $433 million. Revenue growth for OAS and ON was notably high last year, at 3,624% and 1,797% respectively, pointing to successful execution and operational leverage.
Valued at an EV/Revenue ratio of 44.4, Ondas reflects high growth expectations but comes with limited risk tolerance. The company also has a one-year price target at $8.50, driven by potential government contracts and favorable industry trends, making it appealing for investors interested in autonomous defense and industrial automation.
In past coverage, we noted Kroker Equity Research’s positive outlook on Cisco Systems, highlighting its shift to a comprehensive software platform and an impressive acquisition. While Ondas is not among the top 30 most popular stocks among hedge funds, interest appears to be growing, with 20 hedge fund portfolios holding ONDS as of the last quarter. However, we feel that certain AI stocks may offer better upside potential compared to Ondas, particularly given trends in tariffs and onshoring. For those interested in undervalued AI stocks, resources are available.
