Analyst Upbeat On Digital Ally As It Captures Major Order, Expects Legal Tailwinds

Following a press release by Digital Ally, Inc. DGLY reporting it had received its largest ever commercial contract, the stock rallied 12 percent in early morning trade.

WestPark Capital’s Ishfaque Faruk maintains an Outperform rating on the company, with a price target of $9.

Major Order

“We believe such large orders from commercial clients like American Medical Response will lead to more similar-sized orders from other Emergency Medical Transportation companies,” the analyst mentioned.

This contract enhances the company’s long term revenue growth profile. In addition, Faruk expects Digital Ally to be able to recover the legal damages from its legal battle against Utility Associates.

Digital Ally disclosed that its largest ever commercial order had come from American Medical Response, one of the largest providers of Emergency Medical Transportation services in the United States.

Significant Value

The initial order includes 1,550 DVM-250 systems, as well as cloud storage services, and the company expects to recognize revenues of $2 million in FY 2017.

“Over time, AMR expects to deploy DVM-250 event recorders in its full-fleet of 6,500 plus vehicles in F’18 and F’19 which would increase the potential contract value to over $8.3 million over a three-year deployment period,” the analyst stated.

Faruk expects this transaction to generate meaningful recurring revenues from Digital Ally’s FleetVu Manager, while helping to land similar-sized order from other commercial clients and law enforcement agencies.