Is Volatus Aerospace still a buy?

Ventum Financial analyst Rob Goff maintained his “Buy” rating on Volatus Aerospace  (Volatus Aerospace Stock Quote, Chart, News, Analysts, Financials TSXV:FLT) and raised his target price to C$0.80 from C$0.50 in an Aug. 21 report, citing stronger-than-expected second-quarter results and optimism over military and recurring service contracts.

Q2 revenue was $10.6-million with gross profit of $3.4-million, ahead of Ventum’s forecast of $8.0-million and $2.8-million, respectively. EBITDA was a $0.28-million loss, slightly worse than the expected $0.20-million drain. Service revenue grew to $5.5-million and product sales reached $5.1-million, both exceeding estimates. Goff said the outperformance partly reflected Q3 revenue being pulled forward.

“The real leverage lies in securing large military RFPs and further acceleration of high-quality service revenues,” he wrote. “We see compelling tailwinds in a sustainable ramping of military spend together with higher recurring revenues from inspection.”

Volatus, based in Ontario, develops and operates drone platforms for defence, utility and infrastructure customers in Canada and abroad. Service revenues are increasingly anchoring its business model: Goff projects a Q4 2025 service revenue run rate of $35-million, more than 70% of which is recurring and over 90% with repeat customers. Service profits are expected to nearly double those from product sales.

The company’s sales pipeline remains extensive, with $600-million identified opportunities and a broader target of $1-billion. While timing is uncertain, Goff expects near-term non-military contracts could add about $30-million, with larger military awards likely to follow as NATO and Canadian procurement cycles progress.

Ventum cut its Q3 2025 forecast to $10.0-million revenue and negative $0.25-million EBITDA (from $16.3-million and $2.8-million) to reflect revenue deferrals, but raised Q4 revenue by $2-million.

Volatus ended Q2 with about $20-million in cash and $22-million in debt, giving it flexibility to pursue larger contracts. Goff noted that pending regulatory changes in Canada, including amendments to aviation rules in November allowing routine nighttime long-distance drone flights, could unlock new opportunities in surveillance, inspection and cargo delivery.

Recent wins include a $1.85-million NATO ISR drone delivery contract and a $560,000 NATO training deal, both seen as reference points for future allied procurement. Management is also preparing test flights for its Condor XL heavy-lift drone in Q4 2025, with potential commercial use in reforestation and Arctic surveillance.

“We remain very bullish toward Volatus’ success given its comprehensive solution and the government’s expressed desire to domestically source,” Goff said.

Goff said that Volatus should do $0.8-million in Adjusted EBITDA on revenue of $43.6-million in fiscal 2025. He thinks those numbers will improve to $6.4-million on revenue of $67.5-million in fiscal 2026, a sharp ramp in EBITDA expectations alongside steady revenue growth, which Goff described as baseline levels with significant upside potential.

-30-