DroneShield's (ASX:DRO) fiscal year 2026 to fiscal year 2028 revenue forecast was cut by around 9% and earnings-per-share by 5% to 16%, reflecting a lack of material contract wins and a narrowing delivery window, Jefferies said in a Friday note.

It remains cautious around both timing and the near-term earnings impact of its European opportunity. Even if awarded, the program is expected to be released via a series of smaller orders, limiting the likelihood of a material fiscal year 2026 earnings contribution.

DroneShield is implied to be trading at a material premium to a comparable sector control transaction, reinforcing the view that the stock is overvalued at current levels.

The investment firm maintained its underperform rating on DroneShield and cut its price target to AU$2.05 per share from AU$2.80 per share.