Two Canadian stocks with exposure to defence spending

Government drone orders and classified defence programs are supporting the growth outlooks for Volatus Aerospace (Volatus Aerospace Stock Quote, Chart, News, Analysts, Financials TSX:FLT) and Firan Technology Group (Firan Technology Group Stock Quote, Chart, News, Analysts Financials TSX:FTG), with analysts maintaining “Buy” ratings on both companies.

At Volatus, a Canadian Armed Forces contract is helping validate its defence strategy. At Firan, classified programs are already contributing to revenue and a record order backlog.

Haywood Securities analyst Gianluca Tucci reiterated his “Buy” rating on Volatus Aerospace  following its Canadian defence contract win in a Sept. 10 update.

The five-year agreement covers low-cost tactical intelligence, surveillance and reconnaissance drones. An initial order includes 100 systems, with options for another 4,900. The framework has a maximum value of $25-million, depending on options exercised.

“We view this contract as a significant de-risking event to our thesis which moves FLT to a real Canadian defence partner,” Tucci said.

The award follows Volatus’s qualification across all five streams of Canada’s Defence Drone Initiative Marketplace. Initial deliveries were expected in Q4 2026, with work supporting its Mirabel manufacturing hub and Vaughan operations centre.

Tucci forecasts revenue of $40-million and an Adjusted EBITDA loss of $8.6-million in fiscal 2026, improving to revenue of $65.2-million and a $3.7-million loss in fiscal 2027.

Meanwhile, Beacon Securities analyst Russell Stanley raised his target on Firan Technology Group  to $36.00 from $30.00, maintaining his “Buy” rating in an Oct. 8 update.

Firan’s third-quarter revenue increased 34% year-over-year to $64-million, while Adjusted EBITDA climbed 97% to $15.1-million. Stanley said expedited-delivery pricing helped results, particularly on defence work and two classified programs.

Those programs represented about 10% of quarterly revenue. Management described annual program opportunities of $50-million to $100-million as they ramp, although multiple suppliers are expected to participate.

Bookings rose 75% to $90-million, pushing backlog to a record $221-million. Approximately $187-million is expected to convert to revenue by Q3 2027.

Stanley forecasts revenue of $247-million and Adjusted EBITDA of $53-million in fiscal 2027, rising to $273-million and $63-million, respectively, in fiscal 2028. Potential catalysts include additional contracts, acquisitions and fourth-quarter results.