Analysts at Piper Sandler initiated coverage of drone-maker Unusual Machines (UMAC) with a bullish "Overweight" rating and a $38 price target (indicating a 39.5% upside from current levels). This comes at a time when the U.S. Federal Communications Commission (FCC) is banning the use of Chinese-made drones and components.
For instance, a possible crackdown on foreign-made drones with LiDAR obstacle-avoidance features. Simultaneously, the U.S. government is placing a heavy focus on domestic manufacturing of these drones. In light of this, Unusual Machines landed a $2.1 million purchase order for domestically assembled drone systems for defense use this year.
However, Piper Sandler believes the largest tailwind may come from the commercial market. Elon Musk Said Tesla Short Sellers Would Be 'Obliterated' Even Bill Gates — Yet They've Made $9 Billion This Year Shorting the Stock Sergey Brin Wants Google to Double Down on Gemini. What That Means for GOOGL Stock.
Stocks Close Lower on Worries About US Economy Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. The analyst firm posits the thesis that UMAC can supply motors, batteries, flight controllers and other components that drone manufacturers ultimately need.
It was pointed out that more than half of the 11 winners in the first phase of the Pentagon's Drone Dominance competition are already Unusual Machines customers. These factors make the company primed to capitalize on the onshoring of drone manufacturing. However, Piper Sandler analysts also pointed out that there are execution risks associated with the rapid expansion the company is planning.
UMAC is trying to expand motor capacity from about 15,000 units a month to more than 100,000 through an automated production line in Orlando. So, it's not a question of whether drone manufacturing will increase; rather, it's a question of whether UMAC can turn that capacity into revenue generation. U.S. drone company Unusual Machines designs and builds small drones and key components such as motors and video goggles.
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