Drones on the Horizon: Volatus Aerospace, Deutz, and Deutsche Telekom in the Crosshairs

Volatus Aerospace: Now the Growth Can Begin

Volatus Aerospace is positioning itself as a comprehensive provider with a powerful ecosystem. The Canadian company combines aviation systems with data collection, training, and operational services. Its strategic dual-use approach enables deployment in both civilian and military sectors.

Volatus Aerospace recently officially opened a new 53,000-square-foot production and integration facility in Mirabel, Québec, significantly expanding its manufacturing capabilities for unmanned and autonomous systems. Production of drone docking stations, as well as the integration and manufacturing of the company's own V-Series aircraft, is already underway.

The company also reported successful initial flight tests of its proprietary control and autonomy system, V-Cortex. During these tests, the aircraft successfully navigated without satellite navigation signals using its standard onboard sensors. This is particularly relevant for missions where GPS fails, is shielded, or is deliberately jammed. These capabilities allow for a stronger and more advantageous differentiation from competitors.

With its Mirabel facility, Volatus aims to meet the growing demand from the defence, public safety, and industrial and commercial sectors, and to expand its presence in Canada as well as in NATO and other allied markets. For the drone specialist, the investment marks another step toward turning its proprietary technology into scalable, mass-produced products.

The company has long been firmly anchored in NATO and is increasingly solidifying its position there. Most recently, Volatus was awarded a 5-year contract to supply tactical reconnaissance drones to the Canadian Armed Forces. The contract initially calls for 100 systems, with an option to purchase an additional 4,900 units. In addition to the aircraft, the scope of services includes ground stations, data links, training, spare parts, and software support. The deal has a total value of up to CAD 25 million.

The financial figures still reflect heavy investment. The bottom line remains in the red. However, the order books are growing. As of the last reporting date, the company had a comfortable cash balance of CAD 59.2 million to aggressively drive further expansion. Currently, the shares are trading at CAD 0.56, which corresponds to a market capitalization of around CAD 400 million. On average, analysts are setting a price target of CAD 0.95—upside potential of 70%.

Deutz: Full Throttle!

Deutz is really stepping on the gas when it comes to diversification. The engine manufacturer has expanded its business into promising growth areas through acquisitions, investments, and partnerships. The market likes what it sees; a few weeks ago, the stock reached a 28-year high of EUR 13.35. The German company seized the opportunity to raise fresh capital by issuing just over 15 million shares at EUR 11.70 each.

Among other things, this is intended to improve the capital structure following the acquisition of defence technology manufacturer FFG, which takes the group to an entirely new level. Currently, the shares are trading just above EUR 11. Several corporate bodies took advantage of this level to buy shares. Analysts also attest to the stock's significant upside potential.

The wholly-owned subsidiary Sobek supplies electric propulsion systems, including motors, power electronics and software, to European drone manufacturers. Earlier this year, the Cologne-based company entered into a partnership with Tytan Technologies and acquired a stake in the company. Founded in 2023, the defence-tech startup specializes in AI-based drone defence and autonomous air defence. Together, the companies aim to develop and industrialize power and propulsion solutions for drone defence systems. Plans include, among other things, propulsion systems for interceptor drones and power supplies for launch systems.

Deutz recently signed a letter of intent with the US company Hypercraft. Deutz already supplies internal combustion engines; now both partners are exploring additional propulsion solutions for unmanned ground vehicles, including hybrid and battery systems.

Deutsche Telekom: Differing Views on Shareholder Value

Wherever drones are deployed, the need for control also increases. Airports, industrial facilities, and energy providers need to know what is approaching their premises. This is where Deutsche Telekom comes in. Recently, at the major digitalization and technology trade show Digital X, the company demonstrated, among other things, how drones can be detected via radio signals.

Earlier this year, the Bonn-based company announced plans to collaborate with defence giant Rheinmetall to develop a defence network against drones and other threats to critical infrastructure. In doing so, Deutsche Telekom is combining its communications, cloud computing, and data-analysis capabilities with security and defence technology.

However, the main driver of the stock's price movement is management's pursuit of a merger with its subsidiary T-Mobile US, in which the company holds a roughly 54% stake. This stake accounts for a significant portion of the Bonn-based company's valuation.

A few weeks ago, media reports indicated that the activist investor Elliott has built up a larger stake in Deutsche Telekom and is apparently pushing to scuttle the takeover plans. Instead, Elliott prefers other measures to increase shareholder value, particularly more extensive share buybacks.

Volatus, Deutz and Deutsche Telekom demonstrate just how broadly the business of unmanned systems is diversifying. Volatus is most closely linked to the drone industry and, as a defence tech player with its own ecosystem, is well-positioned to capitalize on the opportunities that arise. Analysts estimate the stock has upside potential of around 70%!