Ondas Inc. ONDS has delivered a 23.7% gain in the past six months, but the underlying business momentum appears far stronger, marked by explosive revenue growth, expanding backlog and an ambitious strategic roadmap.
Price Performance
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This raises a key question for investors: is the market underestimating Ondas’ potential, or are execution risks too significant to ignore?
Let’s do a deep dive.
What Favors ONDS?
Ondas is rapidly transforming from a niche unmanned systems player into a scaled, multi-domain defense technology platform. Ondas Autonomous Systems (“OAS”) has quickly become a multi-domain autonomy platform spanning Intelligence, Surveillance, Reconnaissance or ISR, Counter-UAS, loitering munitions/strike systems, unmanned ground vehicles and stratospheric sensing via World View acquisition.
The company has accomplished this broad portfolio through focused M&A activity. In the first quarter alone, the company completed five acquisitions (World View, INDO Earth, Rotron Aerospace, Bird Aero and Mistral Inc).
ONDS announced an agreement to acquire Omnisys Ltd., adding AI-powered battlefield orchestration software to its autonomous defense systems portfolio. In the past year, it has acquired Sentrycs, Apeiro Motion and Zickel, among others. Ondas now operates in more than 45 countries with over 1,000 employees globally.
This expanding reach is complemented by a rapidly growing opportunity set, including a $4.3 billion active pipeline and more than $1.6 billion in strategic program potential, as highlighted by management on the last earnings call. Regionally, Europe and the United States account for the largest share, with roughly $2 billion and more than $1.8 billion in opportunities, respectively. It is advancing in other markets such as Israel. Management noted that the current pipeline represents more than $500 million in potential annualized revenue opportunity.
The pipeline spans multiple operational domains, including aerial security, ISR and unmanned ground vehicles (UGVs). The company is also targeting large-scale defense initiatives such as the LASSO program, which alone represents a potential opportunity nearing $1 billion. Ondas has also accumulated a backlog exceeding $450 million following the acquisitions of World View and Mistral.
Ondas Holdings Inc. Price, Consensus and EPS Surprise
Ondas Holdings Inc. price-consensus-eps-surprise-chart | Ondas Holdings Inc. Quote
Against this backdrop, Ondas recently announced that it has secured more than $30 million in new orders during May 2026 and has surpassed $110 million in total orders quarter to date. Strong order momentum signals growing market acceptance, and the company's transformation into a diversified defense technology platform is gaining traction.
Management increased 2026 revenue guidance to at least $390 million. A key factor will be the integration and monetization of recent acquisitions, particularly World View and Mistral, which are expected to contribute more meaningfully as the year progresses.
With substantial cash reserves and minimal debt, the company is well-positioned to continue investing in growth, pursue acquisitions and navigate market uncertainties.
ONDS: Execution Overhang, Competition and So On
Despite the impressive growth story, Ondas carries substantial risks. Extensive M&A amplifies risks, as so many acquisitions in such a short period can create integration overload and execution risks, as achieving targets depends on timely integration and conversion of backlog into revenues.
Profitability remains concerning. Ondas faces rising operating costs as it invests in personnel and infrastructure capabilities to capture additional market opportunities. First-quarter operating expenses rose substantially to $67 million from $11.8 million reported in the prior-year quarter. This led to an operating loss of $42.7 million, which widened from $10.3 million year over year. Consolidated adjusted EBITDA loss was $10.9 million, wider than a loss of $7.5 million in the first quarter of 2025.
Amid rising costs, management expects adjusted EBITDA losses to stay elevated in the second quarter of 2026, likely marking the peak loss period. Beyond that, ONDS expects improvement throughout the year, driven by higher revenues, gross profit and operational scale.
Notably, management pulled forward the OAS EBITDA profitability target to the first quarter of 2027 — roughly six months ahead of the earlier target. Expectations for company-wide adjusted EBITDA profitability were unchanged, with the target being the first quarter of 2028. The key factor driving this is the company’s progress at the product level.
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Nonetheless, the path to profitability remains heavily dependent on flawless execution. Any delays in integration and order conversion could push the profitability timeline further out. Increasing competition in the already crowded drone space is another headwind.
The drone industry is experiencing rapid growth, with the unmanned aerial vehicle drones market expected to witness a CAGR of 9.3% from 2026 to 2031, according to a report from Mordor Intelligence. Competition has intensified with drone companies such as Red Cat Holdings RCAT, Kratos Defense & Security Solutions KTOS and Draganfly DPRO vying to capture a larger share.
Heavy reliance on OAS for revenue growth in the increasingly crowded drone space is also concerning.
Given these factors, analysts have kept their earnings estimates unchanged for ONDS’ second quarter over the past 30 days.
ONDS Stock vs. Peers
Not just ONDS, but other drone tech players have also seen their stocks perform poorly in the past three months.
KTOS and DPRO have lost 25% and 12.1%, respectively, over the same time frame, while RCAT is up 48.6%.
ONDS: Sky High Valuation Complexes Investment Case
ONDS is trading at a forward 12-month price-to-sales ratio of 9.75X, a premium compared with the Zacks Wireless National industry’s 1.61X.
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The forward 12-month price/sales multiple for KTOS, DPRO and RCAT stand at 5.75X, 1.16X and 6.85X, respectively.
What Does the Second Half Hold for ONDS?
At present, ONDS carries a Zacks Rank #3 (Hold).
Ondas is moving forward with strong momentum in orders and backlog, but much depends on its ability to execute and integrate recent acquisitions effectively.
While the long-term opportunity remains compelling, the sky-high valuation and near-term profitability issues justify a balanced, wait-and-watch stance.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Kratos Defense & Security Solutions, Inc. (KTOS): Free Stock Analysis Report
Ondas Holdings Inc. (ONDS): Free Stock Analysis Report
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Draganfly Inc. (DPRO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).