FLIR Systems Hits 52-Week High - Analyst Blog

On April 1, shares of  FLIR Systems, Inc. FLIR hit a new 52-week high of $36.04 per share. The upward momentum in the share price was driven by the company's strong fundamentals and recent contract wins.  The stock has been experiencing an uptrend and has gained more than 23% in the year-to-date time frame.

In the last few quarters, the company's Government Systems division was primarily impacted by weak domestic demand from the U.S. Department of Defense. However, investors' sentiments improved as the budgetary woes finally ebbed and Obama's $1.1 trillion Omnibus spending measure bill was passed in Jan 2014.

In the last week, FLIR Systems has been awarded a couple of lucrative contracts from Pentagon. Its subsidiary, ICx Technologies, received a $12.3 million contract on March 27, for providing the U.S. Army with as many as 12 sets of dismounted reconnaissance, kits as well as outfits army configuration systems. Prior to this, on March 24, the company received another $18.2 million contract for the supply of turrets for undisclosed weapon systems in U.S. naval operations.

In March, FLIR Systems also took initiatives to streamline its businesses by announcing significant changes in its management structure while simultaneously restructuring its reporting segments. These changes were intended to enhance company-wide communication, while creating a logical structure to further leverage its vertical integration and focus on core markets.

Further, the company has been benefiting from its moderated price structure and quality services along with its persistent focus on the ongoing cost-control strategy.

For 2014, the Zacks Consensus Estimate for this Zacks Rank #4 (Sell) company is currently pegged at $1.48 per share, reflecting year-over-year growth of 7.79% while the same for fiscal 2015 is estimated to be $1.76 per share, translating to year-over-year growth of 18.96%.

Given that the global economy is on its way to recover and that Pentagon has resumed efforts to strengthen its artillery, we envision better prospects for FLIR Systems, going forward. The expected long-term earnings growth rate for the stock is 15.0%.

Some other companies that received contracts from Pentagon include General Electric Company GE, CACI International Inc. CACI and Exelis Inc. XLS.