Red Cat Stock To Rally Over 35% More? Wall Street Analyst Outlines Bull Case On Rising US Defense Budget

As tensions continue to escalate between Iran and the U.S., drone stocks maintain the momentum seen at the beginning of the week.

• Last week, CEO Jeff Thompson said that 2026 is a massive revenue growth year and that the focus in 2027 will be path to profitability. 
• The company’s shares gained more than 17% on Monday following the U.S. and Israel attacking Iran and killing the Supreme Leader Ayatollah Ali Khamenei.
• Ladenburg said it was positive on Red Cat's near-term prospects for "rapid" order scaling.

Shares of Red Cat Holdings, Inc. surged nearly 8% Tuesday to close at their highest level in more than a month, extending gains as defense stocks rallied amid the escalating conflict between the U.S. and Iran.

The stock had already jumped more than 17% on Monday following U.S. and Israeli strikes on Iran that killed Supreme Leader Ayatollah Ali Khamenei. The escalation, which involved missiles and drones, also affected regional nations, including Qatar and the United Arab Emirates.

Ladenburg's Take On RCAT

On Tuesday, Ladenburg Thalmann raised its price target on Red Cat to $20 from $15 and maintained a Buy rating, according to TheFly. The new target implies roughly 36% upside from the stock's last close. The research firm said last week's innovation day helped fuel the latest leg higher.

"2026 is basically a massive revenue growth year for us," CEO Jeff Thompson said during the event, adding that 2027 will focus on the path to profitability. He pointed to rising defense budgets in the U.S. and abroad as a key tailwind.

Chief Operating Officer Chris Ericson said the company is transitioning "from the scrappy little startup" phase to becoming a scaled, reliable supplier. "Our customers want quantity, they want quality, and they want a stable partner," he said.

Ladenburg said it sees potential for "rapid" order scaling in the near term, supported by innovation momentum and heightened geopolitical tensions.

Red Cat supplies the U.S. Army with its Black Widow short-range reconnaissance quadcopter. Last month, at the Singapore Airshow, the company announced an order from an unnamed Asia-Pacific country, saying regional conflicts and uncertainty around China were driving increased military procurement across the region.

What Retail Is Saying About RCAT

Retail sentiment on Red Cat climbed to 'extremely bullish' from 'bullish' a week ago, with message volume at 'extremely high' levels, according to Stocktwits data.

"If there's one thing Iran has shown us, it's that every Hotel, Airport, Oil Tanker, Military Outpost, etc., etc., etc., are gonna need a reliable, autonomous, multi-layered anti-drone system in a small package mounted on their roofs throughout the Mid East and EU," posted one user.

Shares of Red Cat have soared more than 173% over the past 12 months

For updates and corrections, email newsroom[at]stocktwits[dot]com.<