This drone stock is a buy and has major upside potential, Needham says

Red Cat is poised to notch considerable growth as it expands its defense technology offerings, especially since domestic and international military spending is on the rise. The investment firm initiated a buy rating on Red Cat with a price target of $17 per share, implying roughly 32% upside from Friday’s close of $12.89. “We believe the unmanned aerial systems (UAS) industry is entering a multi-year supercycle, and view Red Cat uniquely positioned to capture accelerating demand for defense-grade small ISR drones,” Needham analyst Austin Bohlig said Friday in a note to clients. RCAT 1Y mountain RCAT 1-yr chart The drone technology company is likely to grow due to its expansion into unmanned surface vehicles — a market that is projected to be worth $2.5 billion by 2034, according to research firm GlobalData . Red Cat’s contract with the U.S. Army’s Short Range Reconnaissance Tranche 2 (SRR2) program will support its growth as it could ramp into a $200 million opportunity over the next two years, according to Needham. The firm also sees the acceleration in domestic and international defense spending as a multiyear tailwind for Red Cat. Needham’s call aligns with other analysts’ stock ratings for Red Cat. All three Wall Street shops that cover the company have a buy or strong buy rating on shares, LSEG data shows. Red Cat shares rose almost 12% on Friday. The stock has rallied about 292% over the past year. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )