Heavy Duty Trucking Electrification And OEM Integration Will Drive Powerful Long Term Upside Potential

Catalysts

About Dragonfly Energy Holdings

Dragonfly Energy Holdings designs and manufactures advanced lithium power systems for mobile and stationary energy storage applications.

What are the underlying business or industry changes driving this perspective?

• Deepening OEM integration in premium and innovative RV platforms, including Airstream, Ember and Awaken, positions Dragonfly to outgrow a cyclical RV backdrop as models standardize its batteries. This supports sustained revenue expansion and improves gross margins through scale.
• Accelerating adoption of idle reduction and electrification solutions in heavy duty trucking, validated by pilot conversions to production orders and the PACCAR collaboration, creates a high growth, recurring fleet opportunity that can materially increase revenues and improve earnings quality.
• Domestic manufacturing in Nevada, backed by public grant support and modernization initiatives, enhances control over quality and costs while insulating the company from tariff and supply chain volatility. This dynamic may underpin structurally higher gross margins and stronger cash generation.
• Expansion into underpenetrated industrial and energy markets, such as oil and gas applications still dominated by lead acid batteries, leverages Dragonfly's differentiated safety certifications to open large new verticals that can diversify revenue and support margin expansion.
• A significantly de risked balance sheet with lower debt, reduced interest expense and roughly $30 million of cash allows increased investment in sales, product development and IP rich platforms like Dragonfly IntelLigence and Wakespeed. This may translate into faster top line growth and operating leverage driven earnings improvement.

Assumptions

This narrative explores a more optimistic perspective on Dragonfly Energy Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Dragonfly Energy Holdings's revenue will grow by 25.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -60.1% today to 3.7% in 3 years time.
• The bullish analysts expect earnings to reach $4.2 million (and earnings per share of $0.03) by about December 2028, up from $-34.7 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 108.8x on those 2028 earnings, up from -3.0x today. This future PE is greater than the current PE for the US Electrical industry at 31.4x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.51%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The company remains structurally unprofitable despite recent margin gains, as guidance still points to negative adjusted EBITDA and a wider GAAP net loss. This could signal that higher operating leverage and interest savings are not enough to offset the cost structure and could limit sustained improvements in net margins and earnings over the long term.
• Heavy reliance on cyclical and discretionary end markets such as RVs and consumer facing DTC channels, both already described as challenged with low consumer sentiment and limited visibility, may cap volume growth during downturns and slow adoption of higher value systems. This could constrain long term revenue expansion and delay a durable inflection in earnings.
• The heavy duty trucking opportunity that management views as the primary growth driver in 2026 is starting from a very low base and depends on fleet capital budgets in a constrained and volatile freight environment. Any delays in large scale adoption or further freight recessions could materially undercut the anticipated step change in revenue and stall improvements in overall profit margins.
• Industrial and government linked customers, including oil and gas applications and projects affected by government shutdowns and funding disruptions, introduce long cycle and policy driven risk. Further shutdowns, regulatory changes or funding delays could suppress project volumes and reduce visibility, weighing on segment revenues and overall earnings quality.
• The company’s growth strategy requires ongoing investment in sales capacity and IP rich platforms such as Dragonfly IntelLigence, Wakespeed and advanced chemistries, yet these investments are being balanced against an urgent need to reach profitability. This raises the risk that underinvestment slows innovation and market penetration while overinvestment prolongs cash burn and keeps net margins and earnings under pressure.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Dragonfly Energy Holdings is $2.25, which represents up to two standard deviations above the consensus price target of $1.88. This valuation is based on what can be assumed as the expectations of Dragonfly Energy Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $2.25, and the most bearish reporting a price target of just $1.5.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $114.9 million, earnings will come to $4.2 million, and it would be trading on a PE ratio of 108.8x, assuming you use a discount rate of 11.5%.
  
• Given the current share price of $0.86, the analyst price target of $2.25 is 61.7% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.