Which Analyst-Favorite Drone Stock Will Come Out on Top?

Key Points

• Drone stocks are likely to grow as a group given the technology's widespread adoption in defense, commercial, and civil applications.
• Red Cat, Unusual Machines, and Draganfly are companies focused within the drone space, offering a combination of hardware, software, and services.
• As an emerging industry, the drone space is not fully established, and each of these companies is wrestling with important decisions about profitability, mergers and acquisitions, and focus.

The drone market in the United States is projected to reach about $5.5 billion in 2029, expanding at a CAGR of 10.3% from 2024 through that period. Drones have varied applications in civil, commercial, and defense settings and have become indispensable to everything from weather monitoring to surveillance to military endeavors. For investors, drones present a unique opportunity to gain exposure to a fast-growing industry insulated from a slump in any sector or space.

For investors keen to target drones in their portfolios, the question becomes how best to gain access. One approach is to focus on companies relying heavily on drones for their operations—such as Amazon.com Inc. NASDAQ: AMZN—or on large aerospace firms like Boeing Co. NYSE: BA. Many companies that specialize exclusively or primarily in drones are relatively unknown names. However, some of these firms are also analyst favorites and offer an excellent way to access this technology in a targeted manner.

Recent Dip Could Mean a Buy Opportunity for Red Cat

Puerto Rico-based Red Cat Holdings Inc. NASDAQ: RCAT provides infrastructure and services to the military drone industry. Shares are down about 40% year-to-date (YTD), with the most recent slide in mid-June coinciding with the company's completion of a nearly $47 million direct stock offering to fund general corporate expenses and support Red Cat's new Unmanned Surface Vessels division.

Red Cat has nonetheless grown quickly in recent quarters, up about 540% in the last year alone. With this rapid expansion have come new products, increased access to both domestic and international government customers, and solid revenue growth. In the latest quarter, Red Cat expanded into the maritime autonomy market and introduced new products and geographies for its Black Widow line. The company expects $80 to $120 million in revenue for the full year 2025.

RCAT shares could present a buy opportunity after the recent dip. Both Wall Street analysts reviewing the company have rated it a Buy, and the consensus price target suggests almost 80% in upside potential from current levels.

M&A Activity Solidifies Unusual Machines as a Drone Component Leader

Unusual Machines Inc. NYSEAMERICAN: UMAC sells drones and equipment through multiple brands, such as Fat Shark, and via an e-commerce marketplace called Rotor Riot. Like RCAT above, UMAC shares have fallen substantially in 2025, even as they are up close to 500% in the past 12 months.

The company is in the midst of a major shift related to merger and acquisition activity. In mid-June, Unusual Machines announced a $7 million all-stock deal to acquire Rotor Lab, an Australian firm that designs and builds electric motors and propulsion systems for drones. In the same month, Unusual Machines also revealed that it would open a 17,000-square-foot drone motor production facility in Florida.

Despite these aggressive expansion efforts, investors might be cautious. Unusual Machines also recently terminated a deal to purchase drone fleet management software company Aloft Technologies for about $15 million. With these developments, Unusual Machines' future as a firm fully focused on drone components becomes clearer, although such a focus carries risks related to tariffs, capital concerns, and more.

Like Red Cat above, Unusual Machines has the support of both analysts who have rated the stock and enjoys a unanimous Buy rating. Together, price target estimates suggest that UMAC shares could gain 138%.

Dilution and Continued Losses May Set Draganfly Back

Draganfly Inc. NASDAQ: DPRO designs drone hardware and software with a focus on monitoring health conditions and public safety, delivering essential supplies, and completing defense operations. DPRO shares are down about 34% YTD and 53% in the last year.

A recent highlight that could motivate investors is Draganfly's 100% success rate in autonomously deploying and recovering supply pods in a U.S. Army experiment with its Commander 3XL system. Around the same time, the company also completed a roughly $14 million public offering. Its first-quarter losses per share were smaller than anticipated, but financial concerns like high costs still plague the firm.

Despite the fact that the two analysts reviewing DPRO shares also rate them a Buy and that the company's stock has 93% upside potential, investors might be better off looking at one of the options above until Draganfly is able to address some of these issues.