Summary

• Red Cat Holdings is rated STRONG BUY with a $16.50 12-month price target, driven by 849% YoY revenue growth and gross margin recovery.
• RCAT's Black Widow drone gains traction beyond the U.S. Army, securing NATO and Japanese defense contracts, expanding its addressable market, and reducing customer concentration risk.
• Pro forma cash of $351 million and significant inventory build position RCAT to capture upcoming defense spending tailwinds and support near-term growth without immediate financing needs.
• Management guides for $150–$180 million FY2026 revenue, with improving unit economics and allied validation supporting a premium valuation multiple versus peers.

Red Cat Holdings (RCAT) seems to have hit an inflection point, with improved earnings and strong growth in Q1. The company posted revenues of $15.5 million, up 849% year over year, with gross margins improving from -52.1% to 12.7%. With

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