Veem's (ASX:VEE) recent update is supportive of the anticipated fiscal second half recovery and provides greater confidence in fiscal 2027 growth, Euroz Hartleys said in a note on Tuesday.

The company's around 1,000-square-meter factory extension is complete. It also commissioned its new 3D printer and received the remaining AU$600,000 of its AU$1 million grant under the defense industry development program.

The completion of the factory expansion and commissioning of new equipment should increase manufacturing capacity, improve operational efficiency, and support growth across defense, propulsion, and engineering, Euroz Hartleys said.

It reinforces the view that Veem's near-term earnings recovery is being driven by defense order execution, with recent investments in manufacturing capacity and new product development positioning it for stronger growth into fiscal 2027.

Fiscal 2026 revenue is expected to range from AU$50 million to AU$52 million with earnings before interest, taxes, depreciation, and amortization (EBITDA) of AU$3.3 million to AU$3.8 million. Euroz Hartleys said the updated EBITDA guidance implies a materially stronger second half relative to the first one.

The investment firm retained its speculative buy rating on Veem, while its AU$1 price target is under review.

Veem's shares were down nearly 1% in recent Wednesday trade.