Sticking With This Ondas Price Target After Sales Guidance Update
The small-cap firm crushed expectations, though with some mixed results.
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On Thursday morning, portfolio holding Ondas Inc (ONDS) released the firm’s second quarter financial results. For the period ended June 30, Ondas posted a GAAP EPS of -$0.19 on revenue of $83.772 million. These results appear to be somewhat mixed. The top-line print crushed expectations and was good enough for not only a company record, but year-over-year growth of 1,236%. That bottom-line print looks like it missed badly. Guess we’re going to have to dig into this.
There is plenty to like here. The firm can boast $175 million in new orders for the quarter, demonstrating the momentum of the core platform. The firm states that it has already landed $105 million in additional new orders to date for the current quarter. Ondas now reports an order backlog of roughly $613 million as of June 30 and a pro forma backlog of $757 million as of that date, including the DZYNE and Cyberhawk acquisitions. Both of these transactions closed during the current quarter. As a result, the firm has increased its sales guidance.
The CEO
Eric Brock, who is both chairman and CEO at Ondas, commented in the press release:
“The strength of our Core + Strategic Growth plan is increasingly becoming evident, and I am particularly pleased with the recent addition of new businesses, headlined by DZYNE Technologies and Cyberhawk, which have closed during Q3. DZYNE meaningfully broadens our solutions portfolio globally, highlighted by the ULTRA and IonStrike platforms, while also accelerating the maturation of our U.S. operating platform and deepening our relevance with the U.S. Department of War. Meanwhile, Cyberhawk’s excellence in delivering aerial solutions supporting critical-infrastructure inspection and intelligence further advances our dual-use technology, services and AI capabilities. Collectively, these two new companies bring Ondas exceptional relationships with important customers such as the U.S. Air Force, U.S. Army, PG&E and Shell, among many others, while expanding our operating footprint.”
Brock added:
“We expect our momentum to continue to accelerate in the second half of 2026 as volume deliveries ramp on key programs, particularly across our counter-drone, multi-domain ISR and precision strike verticals. Indeed, the order book remains strong, and our pipeline continues to expand. We have a great deal of work ahead, but I remain optimistic that Ondas is on the right path to deliver for our customers, partners, employees and, of course, our investors.”
Operations
As revenue generation grew 1,236% to $83.772 million, the cost of goods sold increased 1,512% to $47.641 million. This left a gross profit of $36.131 million (+984%). After adjustments made for the amortization of acquisition related intangibles and stock-based compensation, gross profit becomes $42.252 million (+1,099%). GAAP gross margin printed at 43.1%, while adjusted gross margin printed at 50.4%.
Total GAAP operating expenses hit the tape at $199.077 million, leaving a GAAP operating income/loss of -$162.946 million. After adjustments, operating expenses drop to -$93.244 million, leaving operating income/loss at -$50.992 million. Once accounting for interest, other income and expenses and taxes, GAAP net income/loss landed at -$88.587 million, which works out to -$0.19 per fully diluted share.
Guidance
Ondas increased its revenue target for the full fiscal year to $525 million to $550 million. This is up from previously issued guidance for $390 million. Wall Street was looking for $525 million, so this is a beat. On a pro forma organic basis, the midpoint of the range would be good enough for more than 30% annual growth. This updated target includes revenue expected from recently closed acquisitions during the second half of 2026.
Balance Sheet
Ondas ended the period with a cash position of $1.393 billion and inventories of $52.034 million. That puts current assets at $1.606 billion. Current liabilities add up to $163.083 million, including deferred revenue (not an actual financial obligation of $26.834 million) and short-term debt of just $2.28 million. This puts the firm’s current ratio at a muscular 9.85, which goes far beyond anything described by the word “robust.”
Total assets amount to $2.993 billion. This does include goodwill and other intangibles of $1.245 billion. At 42% of total assets, that does seem to me to be a bit much. Total liabilities less equity comes to $1.418 billion. There’s not much debt there, but there are warrant liabilities of $1.044 billion. What does that mean? Simply put, holders of these warrants have the right to buy stock at given prices. It means that if successful, the stock will very likely face some equity dilution.
Opinion
The stock, which had been trading higher overnight, is now trading lower in the wake of these results. Profitability fell short of expectations. The stock will eventually face some dilution. Those are the negatives. Sales are growing like a weed, and the acquisitions seem to be fitting in quite well. In addition, the balance sheet is close to fortress quality. I am still a fan of the stock. I expect to add on Thursday on weakness.
Readers will see that the shares of ONDS have created a cup pattern from mid-June into the present that is now adding a handle. This moves the pivot to the $10 apex of the right side of the cup. The stock has lost its 200-day SMA, which had been retaken earlier this week. It’s now important for ONDS to hold onto both its 50-day SMA and 21-day EMA. That will keep the swing crowd on board while preventing the pros that are making sales from turning this sell-off into a fire sale. Both relative strength and the daily MACD remain in bullish setups.
Target Price: $14 (reiteration)
Pivot: $10 (right side of cup)
Add: down to 50-day SMA (around $8.70)
Panic: Loss of mid-July low.
Wednesday’s Intention vs Actual Trade
Intention: Sell 15 shares of (VELO) at or close to the last sale of $16.85
Actual trade: Sold 15 shares of VELO at $15.12
Thursday’s Intentions
Purchase 25 shares of ONDS at or close to the last sale of $9.25
Current Positions
Long 300 shares of (ALTO) at $5.0782. Target price: $8. Last sale: $4.31.
Long 80 shares of (EVLV) at $5.8959. Target price: $8.50. Last sale: $5.78.
Long 115 shares of (OCUL) at $8.3545. Target price: $11. Last sale: $10.38.
Short one OCUL $11 September 18 call at $1.65. Last sale: $1.55.
Long 250 shares of ONDS at $8.4266. Target price: $14. Last sale: $9.25.
Long 50 shares of (PL) at $24.4758. Target price: $46. Last sale: $24.52.
Long 8 shares of (RKLB) at $71.4888. Target price: $101. Last sale: $82.78.
Long 100 shares of (SOFI) at $15.7153. Target price: $24. Last sale: $18.20.
Long 50 shares of (SWBI) at $15.2614. Target price: $19. Last sale: $14.15.
Long 100 shares of VELO at $12.2986. Target price: $21. Last sale: $16.35.
Cash: $279.86.
Portfolio Value: $11,613.20, +16.1% from inception on March 24.
At the time of publication, Guilfoyle was long ALTO, EVLV, OCUL, ONDS, PL, RKLB, SOFI, SWBI and VELO.
