Category: Aerospace and Defense

Friday, February 7, 2020

Vectrus (VEC)

U.S. Army Determines LOGCAP V Bid Prices Reasonable, Will Proceed with Original Awardees

Vectrus Inc is a U.S.-based company that provides services to the U.S. government. It operates as one segment and offer facility and logistics services and information technology and network communications services. The information technology and network communications capabilities consist of communications systems operations and maintenance, management and service support, systems installation and activation, system-of-systems engineering and software development, and mission support for the department of defense. The facility and logistics service include airfield management, ammunition management, civil engineering, communications, emergency services, life support activities, public works, security, transportation operations and others.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

U.S. Army Determination. On February 5th, the U.S. Army filed a status report with the U.S. Court of Federal Claims regarding its reexamination of bid prices under the LOGCAP V award. The Army determined the bid prices of the winning awardees are reasonable. Hopefully, this will allow Vectrus to move forward on its awards under LOGCAP V.

Proceeding with Original Awardees. According to the status report, the Army “intends to proceed with the previously awarded LOGCAP V contracts on or after March 2nd.” Recall, in April 2019, Vectrus was awarded LOGCAP V contracts for the CENTCOM and…

Get the full report on Channelchek desktop.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Friday, February 7, 2020

Vectrus (VEC)

U.S. Army Determines LOGCAP V Bid Prices Reasonable, Will Proceed with Original Awardees

Vectrus Inc is a U.S.-based company that provides services to the U.S. government. It operates as one segment and offer facility and logistics services and information technology and network communications services. The information technology and network communications capabilities consist of communications systems operations and maintenance, management and service support, systems installation and activation, system-of-systems engineering and software development, and mission support for the department of defense. The facility and logistics service include airfield management, ammunition management, civil engineering, communications, emergency services, life support activities, public works, security, transportation operations and others.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

U.S. Army Determination. On February 5th, the U.S. Army filed a status report with the U.S. Court of Federal Claims regarding its reexamination of bid prices under the LOGCAP V award. The Army determined the bid prices of the winning awardees are reasonable. Hopefully, this will allow Vectrus to move forward on its awards under LOGCAP V.

Proceeding with Original Awardees. According to the status report, the Army “intends to proceed with the previously awarded LOGCAP V contracts on or after March 2nd.” Recall, in April 2019, Vectrus was awarded LOGCAP V contracts for the CENTCOM and…

Get the full report on Channelchek desktop.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Monday, January 27, 2020

Kratos Defense & Security (KTOS)

Are Recent Headlines a Harbinger of Things to Come?

Kratos Defense & Security Solutions is a National Security technology provider with proprietary expertise in the area of unmanned aerial vehicles, electronics for missile defense systems, electronic warfare systems, satellite control and management systems and support services for emerging naval weapon systems. Commercial and state and local government revenues are about 25% of the total and comprise primarily of critical infrastructure monitoring and protection systems.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

More Positive Headlines.  In a recurring, almost weekly, theme, Kratos continues to see positive developments across a broad swath of its business. This past week, Kratos saw what we view as positive developments in both its Gremlins and Skyborg programs. While a leading independent, non-partisan policy research institute reaffirmed the need for Kratos’s products.

Successful Gremlins Test. DARPA’s Gremlins program completed the first flight test of its X-61A vehicle, built by Kratos. Kratos partners with Dynectics on this program which seeks to launch swarm UASs from multiple types of aircraft. The November test met all of its objectives. Another test…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Monday, January 27, 2020

Kratos Defense & Security (KTOS)

Are Recent Headlines a Harbinger of Things to Come?

Kratos Defense & Security Solutions is a National Security technology provider with proprietary expertise in the area of unmanned aerial vehicles, electronics for missile defense systems, electronic warfare systems, satellite control and management systems and support services for emerging naval weapon systems. Commercial and state and local government revenues are about 25% of the total and comprise primarily of critical infrastructure monitoring and protection systems.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

More Positive Headlines.  In a recurring, almost weekly, theme, Kratos continues to see positive developments across a broad swath of its business. This past week, Kratos saw what we view as positive developments in both its Gremlins and Skyborg programs. While a leading independent, non-partisan policy research institute reaffirmed the need for Kratos’s products.

Successful Gremlins Test. DARPA’s Gremlins program completed the first flight test of its X-61A vehicle, built by Kratos. Kratos partners with Dynectics on this program which seeks to launch swarm UASs from multiple types of aircraft. The November test met all of its objectives. Another test…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, January 8, 2020

Kratos Defense & Security (KTOS)

Additional Contract Wins

Kratos Defense & Security Solutions is a National Security technology provider with proprietary expertise in the area of unmanned aerial vehicles, electronics for missile defense systems, electronic warfare systems, satellite control and management systems and support services for emerging naval weapon systems. Commercial and state and local government revenues are about 25% of the total and comprise primarily of critical infrastructure monitoring and protection systems.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

New Drone Award. On January 7th, Kratos received a $6 million order for unmanned aerial target drone systems, and related ancillary and spares support equipment. The order comes on the heels of a successful test by the U.S. Air Force in shooting down one of Kratos’s BQM-167 target drones in testing a laser-guided rocket in a first-of-its-kind test, although it is unclear if the two are related.

Additional Drone Funding. We would note that under the recently passed DoD budget, congressional appropriators gave the Air Force an extra $100 million for the Low-Cost Attritable Aircraft Technology project, which aims to build drones that cost less than older models and could be more affordable to replace if lost in combat. Such aircraft could be deployed in swarms or…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, January 8, 2020

Kratos Defense & Security (KTOS)

Additional Contract Wins

Kratos Defense & Security Solutions is a National Security technology provider with proprietary expertise in the area of unmanned aerial vehicles, electronics for missile defense systems, electronic warfare systems, satellite control and management systems and support services for emerging naval weapon systems. Commercial and state and local government revenues are about 25% of the total and comprise primarily of critical infrastructure monitoring and protection systems.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

New Drone Award. On January 7th, Kratos received a $6 million order for unmanned aerial target drone systems, and related ancillary and spares support equipment. The order comes on the heels of a successful test by the U.S. Air Force in shooting down one of Kratos’s BQM-167 target drones in testing a laser-guided rocket in a first-of-its-kind test, although it is unclear if the two are related.

Additional Drone Funding. We would note that under the recently passed DoD budget, congressional appropriators gave the Air Force an extra $100 million for the Low-Cost Attritable Aircraft Technology project, which aims to build drones that cost less than older models and could be more affordable to replace if lost in combat. Such aircraft could be deployed in swarms or…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Thursday, January 2, 2020

Kratos Defense & Security (KTOS)

Well Positioned for 2020

Kratos Defense & Security Solutions is a National Security technology provider with proprietary expertise in the area of unmanned aerial vehicles, electronics for missile defense systems, electronic warfare systems, satellite control and management systems and support services for emerging naval weapon systems. Commercial and state and local government revenues are about 25% of the total and comprise primarily of critical infrastructure monitoring and protection systems.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Risk/Reward Remains Enticing. Following our October 1st upgrade, KTOS shares rose 16.7% by mid-November before drifting back down to the current level. We continue to believe KTOS shares represent a favorable risk/reward opportunity at these levels.

Opportunity Set Growing. Kratos’s opportunity set remains large and growing as the DoD continues to recapitalize towards peer and near peer threats, Kratos’s sweet spot. Kratos has a number of programs that could achieve Program of Record and…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Space Force Will Require Emerging Technologies – Emerging Growth Companies in Various Sectors may Soar

(Note: companies that
could be impacted by the content of this article are listed at the base of the
story [desktop version]. This article uses third-party references to provide a
bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)

U.S. President Donald Trump’s signature this past Saturday (December 20, 2019) on the National Defense Authorization Act (NDAA) for the Fiscal Year 2020 was historic. The bill creates the U.S. Space Force. The new military service is the first since the Department of the Air Force was created in 1947. The U.S. Armed Forces now officially have a sixth branch.

 How?

Space Force, although a separate military branch, will be administered by the Secretary of the Air Force. The Air Force itself had been a division of the U.S. Army until it achieved more autonomy in 1947. The NDAA requires a four-star general to lead Space Force, (Chief of Space Operations) they will be a member of the Joint Chiefs of Staff, but not until 2021, at the earliest.

 Why?

The United States has important assets in space that are both public and private that are critical to the U.S. military and the U.S. economy. A notable example would be the global positioning system satellites, which power navigation devices for both the military and civilians. An attack on space-based communication systems could also be crippling for the country. Without the 2000 public and private satellites in orbit, relaying signals for TV, radio, internet, phone, and military applications, we’d all become dangerously vulnerable.

Last Spring, the Senate Armed Services Committee, released an 11-page
statement by the Assistant Secretary of Defense for Homeland Defense & Global Security which conveyed:

    “Space is integral to the U.S. way of life and the U.S. way of war. Although United States space systems have historically maintained a technological advantage over those of our potential adversaries, those potential adversaries are now advancing their space capabilities and actively developing ways to deny our use of space in a  crisis or conflict. Without change, the United States is at risk of losing its comparative advantage in space.”

The release asserts that both China and Russia have already begun major efforts to develop technologies that could disrupt, hack, or destroy U.S. owned assets in space. Space has become a potential battlefield unto itself. The first “airmen” to serve will be reassigned from the Air Force. It’s expected that Space Force will not be the name of the new military branch. It was never intended to be more than a working title, now it has become a bit of a public relations challenge as it has been dubbed “Space Farce” by some of its detractors. There are other housekeeping items to overcome, such as creating a logo, uniform, military song, and other culture imperatives. Eventually, reassigned airmen from the Air Force could be asked to permanently transfer, total ranks are expected to add to about 20,000.

 Bullish or Bearish?

With change comes opportunity. As the U.S. military requires faster processing, more resilient metals and composite materials, more efficient power and fuel alternatives, new testing grounds, and other requirements that have not yet been envisioned, the large aerospace contractors (BA, LMT, NOC) along with many of the small public and private companies they rely on, are potential beneficiaries.

 Sources:

https://www.armed-services.senate.gov/imo/media/doc/Rapuano_03-27-19.pdf

https://www.airforcemag.com/air-force-winners-and-losers-in-the-draft-2020-ndaa/

https://spacenews.com/trump-signs-defense-bill-establishing-u-s-space-force-what-comes-next/ 

https://www.thestreet.com/investing/trumps-space-force-could-lift-these-companies-14872660

https://www.defense.gov/explore/story/Article/2034790/time-to-move-forward-with-space-force-air-force-secretary-says/

Friday, December 13, 2019

DLH Holdings Corp. (DLHC)

Well Positioned to Capitalize on Government Services Trends

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offers services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of Defense and other government agencies. It operates primarily through prime contracts and also derives its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Well Positioned. With the S3 acquisition, DLH is well positioned to compete on an increasing opportunity set, in our view. DLH’s expanded core competencies dovetail nicely with key trends in the government services market, especially in DLH’s core agencies such as the Department of Veterans Affairs, Department of Health and Human Services, and public health and life sciences agencies.

Favorable End Markets. The recent Budget deal, if enacted, increases funding to DLH’s core end markets: the VA by 9.6%, DoD by 5%, and HHS by 4.4%, with even higher increases at sub agencies. The increased spending should…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Thursday, December 12, 2019

DLH Holdings Corp. (DLHC)

Another Solid Quarter with Revenue Topping Expectations

DLH Holdings Corp is a provider of technology-enabled business process outsourcing and program management solutions in the United States. The company offers services to several government agencies which include the Department of veteran affairs, Department of health and human services, Department of Defense and other government agencies. It operates primarily through prime contracts and also derives its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

4Q19 Results. Fourth quarter revenue came in at $54.2 million and diluted EPS was $0.12. We were at $51.3 million and $0.13, respectively. The quarterly revenue exceeded management’s preliminary October expectation. Full year revenue totaled $160.4 million and diluted EPS was $0.41. Excluding transaction-related expenses, non-GAAP EPS was $0.49 for FY2019.

Organic Growth A Positive. As expected, the majority of the year-over-year revenue growth was driven by the S3 acquisition, but DLH also delivered organic growth of approximately…

Get the full report on Channelchek desktop.

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in the full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, November 6, 2019

Kratos Defense & Security (KTOS)

Another Solid Quarter But Will Continuing Resolution Hit The Pause Button?

Kratos Defense & Security Solutions is a National Security technology provider with proprietary expertise in the area of unmanned aerial vehicles, electronics for missile defense systems, electronic warfare systems, satellite control and management systems and support services for emerging naval weapon systems. Commercial and state and local government revenues are about 25% of the total and comprise primarily of critical infrastructure monitoring and protection systems.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• 3Q19 Results. Kratos reported solid 3Q19 results, with quarterly revenue of $184.1 million and $20.4 million of adjusted EBITDA topping our estimates of $180 million and $17.1 million, respectively. The Unmannned segment was the driving force behind the better than expected results, with segment revenue up 37.2%.
  
• Follows Recent Additional Awards.   hursday’s announcement comes on the heels of two other unmanned awards, including a $23 million award in early August for a production run of target jet drones and a $4.8 million award in mid-August for…
  

  
  

  Get full report on Channelchek desktop.

  
  

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Wednesday, October 30, 2019

Comtech Telecommunications Corp. (CMTL)

A Troposcatter Win for Comtech?

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite packet data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs, develops, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

• Marines Troposcatter Award.  Last night, the U.S. Navy announced it had awarded CubicGATR Technologies Inc. a $325 million firm-fixed-price, indefinite-delivery/indefinitequantity contract for the purchase of up to a maximum 172 Next Generation Troposcatter system manufacturing and delivery, test support, technical data delivery, logistics data delivery, training data delivery and training support, fielding support and sustainment support.
  
• Comtech’s Partner? We believe CubicGATR is Comtech’s partner in the bid. There was one other bidder, believed to be Raytheon, whom…
  
  

  
  

  Get full report on Channelchek desktop.

  
  

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst
certification and important disclosures included in full report. 
NOTE: investment decisions should not be based upon the content of
this research summary.  Proper due diligence is required before
making any investment decision. 

Was the US Right in Removing Troops from Syria?

(Note: companies that
could be impacted by the content of this article are listed at the base of the
story [desktop version]. This article uses third-party references to provide a
bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)

On October 6, 2019, President Trump announced that the United States would withdraw approximately 2,000 troops from northern Syria. The decision was met by criticism from both sides of the aisle, with the House of Representatives voting 354-60 to condemn the pullout. The president has since indicated that the US will keep about 200 troops in eastern Syria to protect oil interests and that the remaining troops will move to Iraq. Shortly after the president’s announcement, Turkey launched an attack against Kurdish forces, driving them away from the Syria-Turkey border. Was the president correct in removing troops from an “endless war” in which the country has little vital interests (Bull Case) or will withdrawing troops hurt US long-term interests in the region (Bear Case)?