Roth Capital Partners has initiated coverage of Unusual Machines, a drone components manufacturer, with a buy rating and a price target of $25 per share, suggesting a potential upside of 77% from the stock's closing price on Tuesday. Analyst Craig Irwin highlighted that the U.S. drone components market is benefiting from strong regulatory support aimed at establishing a domestic supply chain.
This push is part of a broader initiative, including an executive order signed by former President Donald Trump to accelerate domestic drone production and integrate drones into the National Airspace Program. Additionally, the U.S. is contemplating an increase in its defense budget to $1.5 trillion for fiscal 2027, which could provide more funding for contracts with drone manufacturers.
The U.S. is also implementing restrictions on DJI drones, produced by the Chinese company SZ DJI Technology, which is expected to create opportunities for domestic companies like Unusual Machines.
Irwin noted that the exclusion of Chinese-made drone parts could reveal a multi-billion-dollar market, with initial demand expected from the Department of Defense, followed by delivery and consumer drones. Roth's optimistic outlook aligns with the consensus among analysts, as all four covering Unusual Machines have issued buy ratings.
The company's shares have already increased by 11% since the start of the year