Piper Sandler Is Bullish on Unusual Machines Stock. Here’s Why.
Businessman trading stock market on teblet screen by Nespix via iStock 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…
Businessman trading stock market on teblet screen by Nespix via iStock
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.
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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.
About Unusual Machines Stock
U.S. drone company Unusual Machines designs and builds small drones and key components such as motors and video goggles. Headquartered in Orlando, Florida, it operates multiple local factories that produce National Defense Authorization Act (NDAA)-compliant drone gear.
Its brands include Fat Shark, known for pilot video goggles, and Rotor Riot, an online store selling acrobatic FPV drones and accessories. The firm, with a market capitalization of $1.35 billion, sells to both businesses and consumers through e-commerce and retail channels.
UMAC’s stock has surged strongly over the past year, driven by explosive revenue growth, a strategic pivot to U.S. manufacturing of NDAA-compliant drone components, and strong policy tailwinds from the U.S. drone and defense boom. Over the past 52 weeks, the stock has gained 159.9%, while it is up 113.8% year-to-date (YTD). It reached a 52-week high of $34.36 on June 2, but is down 20.7% from that level.
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UMAC has a 14-day relative strength index (RSI) reading of 61.78, which is closer to the overbought territory than the oversold territory. On a forward-adjusted basis, UMAC’s stock is trading at a price-to-sales ratio of 24.10 times. This high valuation looks even more stretched when we compare it with the 3.40x industry average.
For the second quarter, UMAC’s revenue increased almost eightfold compared to the prior-year period to $16.72 million, capitalizing on a very high-demand market. Its gross margin swelled to $5.80 million. Despite aggressive expansion, the company’s losses reduced, as the rate of increase in expenses lagged behind top-line growth. Its loss per share dropped from $0.32 to $0.16 year-over-year (YOY).
Looking ahead, the company remains optimistic about scaling capacity, with camera manufacturing expected to start in late 2026. However, UMAC also expects a negative effect of rapid scaling on its gross margin in the short-term.
For the current fiscal year, the company’s loss per share is projected by Wall Street analysts to decrease by 20% YOY to $0.72, followed by a 19.4% improvement to $0.58 per share in the next fiscal year. However, for the current quarter, loss per share is projected to increase by 566.7% YOY to $0.20.
What Do Analysts Think About Unusual Machines’ Stock?
Unusual Machines has earned a good reputation on Wall Street, as analysts largely maintain a positive outlook on the stock. Needham analyst Austin Bohlig maintained a “Buy” rating on the stock this month and raised the price target from $30 to $40. After the company announced the Upgrade Energy merger agreement, analysts at H.C. Wainwright initiated coverage of the stock in July with a “Buy” rating and a $42 price target.
Prior to that, Roth Capital analyst Craig Irwin raised UMAC’s price target from $25 to $40 in June, while keeping a positive “Buy” rating on the stock, after reports came of a probable government investment. The analyst sees this as an indication that the U.S. government views demand as above industry capacity. This funding is expected to be important for the company, as it de-risks its position as a leader in drone components.
Unusual Machines has gained significant fame on Wall Street, with analysts awarding it a consensus “Strong Buy” rating. Of the nine analysts rating the stock, seven have given it a “Strong Buy,” one a “Moderate Buy,” and one a “Hold.” The consensus price target of $37.71 represents a 38.4% upside from current levels. The Street-high price target of $45 indicates a 65.2% upside.
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On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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