EOS shares take off on $32m US weapons deal

The Electro Optic Systems Holdings Ltd (ASX: EOS) shares have jumped around 7% to $7.78 (as of the time of writing) after the defence technology company announced it had secured a significant new international contract worth approximately $32 million.

In an ASX release, EOS announced a new order for its R400 Remote Weapon System (RWS) from a North American prime contractor supplying Light Armoured Vehicles (LAVs) to an end-user in South America.

The customer, while undisclosed, is described as a large, investment-grade defence manufacturer, which likely signals reliability and lower counterparty risk.

The order covers not only the supply of weapon stations but also vehicle integration kits, storage services, and a range of related components. Manufacturing will take place at EOS' facility in Canberra throughout 2026 and 2027, providing the company with multi-year production visibility.

Why the market reacted so strongly

This latest win comes at a time of heightened momentum for EOS. The company has been steadily accumulating new contracts across its product portfolio, from counter-drone systems to high-energy laser weapons and traditional RWS platforms.

EOS now boasts an unconditional contract backlog exceeding $400 million, up sharply from $136 million at the end of 2024.

In other words: the order book has tripled in under a year.

For investors, today's news reinforces the view that demand for EOS technology is accelerating across multiple regions, particularly in North America, Europe, and the Indo-Pacific. As global defence budgets rise, companies with specialised, combat-proven systems (especially counter-drone and remote-weapon technologies) are seeing increased procurement activity.

The contract also fits neatly into EOS' turnaround narrative. After a volatile few years marked by balance sheet stress and program delays, the company is now consistently securing large, export-focused deals. Multi-year revenue conversion across 2026–27 provides clearer financial visibility and reduces execution risk.

Foolish bottom line

While defence stocks can be sensitive to contract timing, today's rally suggests confidence is returning. With a growing backlog, an expanding global footprint, and sustained demand for advanced weapon systems, EOS appears to be rebuilding credibility, and investors have taken notice.

EOS shares are up a phenomenal 494% so far in 2025, eclipsing fellow market darling Droneshield Ltd (ASX: DRO), whose share price is up 252% year to date.

The post EOS shares take off on $32m US weapons deal appeared first on The Motley Fool Australia.

Motley Fool contributor Kevin Gandiya has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2025