DroneShield Ltd (ASX: DRO) shares were sold off on Tuesday.

The counter drone technology company's shares ended the session almost 9% lower at 80 cents.

This followed the release of the company's full year results which revealed slightly weaker than expected operating earnings.

What are brokers saying about the result?

Bell Potter has responded relatively positively to the results, though, it notes that it was largely pre-released. The broker said:

CY24 result largely pre-released. DRO recorded revenue of $57.5m, representing +6% growth YoY, at a gross margin of 71.7%. The EBITDA result of -$8.6m was below our estimates (-$8.0m) and largely driven by a substantial increase in operating expenses as the company scales up its operations. The better-than-expected net loss of -$1.3m (BPe -$4.8m) was the result of a $5.5m income tax benefit. No dividend was declared and none was expected. The company recorded an operating cash outflow of -$62.2m (BPe -$55.9m) and the cash balance was $215.2m as at 18-Feb-25.

Its analysts also highlight that Droneshield is well-placed for 2025 thanks to its significant contracted revenue and lucrative sales pipeline. It said:

DRO has $52m of contracted revenue for delivery in 2025, which represents 90% of the CY24 result, and has recognised approximately $18.0m in revenue YTD. The company has a robust sales pipeline of $1.2b, which does not include major near-term sales opportunities such as the as LAND156 program in Australia (rollout of C-UxS solutions across Australian Defence Force) due to difficulty quantifying the opportunity.

Should you buy the dip?

Bell Potter thinks that the pullback by Droneshield shares has created a very attractive buying opportunity for investors.

According to the note, the broker has retained its buy rating and $1.10 price target on the company's shares.

Based on its current share price of 80 cents, this implies potential upside of almost 40% for investors over the next 12 months.

Summarising its view of the result and the stock, Bell Potter said:

This result was largely as expected, as such, our focus was on the company's performance so far in CY25, which remains positive and well-ahead of CY24. However, the lumpiness of contract awards remains, with the company receiving an additional ~$4m in contracted revenue in February compared to the $48m received in January. Ultimately, we remain bullish on a much-improved performance in CY25, however it is still too early to determine to what level the strong early performance can be repeated throughout the year.