Back to top

Analyst Blog

Zacks Investment Research downgraded FLIR Systems, Inc. (FLIR - Analyst Report) to a Zacks Rank #5 (Strong Sell) on Feb 11, 2014.

Why the Downgrade?

FLIR Systems witnessed sharp downward estimate revisions after reporting disappointing fourth-quarter 2013 results. Further, this thermal image provider reported negative earnings surprises in 3 of the last 4 quarters, with an average of -3.9%. Out of the 7 analysts covering the stock, 5 have lowered their estimates for the current and the next quarter in the last 7 days, while 6 analysts have lowered their estimates for fiscal 2014.   

On Feb 7, FLIR Systemsreported fourth-quarter 2013 earnings (excluding one-time items) at 35 cents, down 32.7% from 52 cents in the year-ago quarter. Quarterly earnings also missed the Zacks Consensus Estimate by 10.3% or 4 cents.

The quarterly results were primarily impacted by weakness in order flow from U.S. government-funded customers.

However, the company’s revenues picked up 3.6% during the quarter driven by its Commercial Systems segment but were offset by decline in the Government System division. The Government Systems division was primarily impacted by weak demand from the Department of Defense.

Nevertheless, the company announced changes in its management structure and also restructured its reporting segments, to further strengthen company-wide communication, while creating a logical structure that will further leverage its vertical integration and focus on core markets.

The Zacks Consensus Estimate for the first quarter of 2014 decreased as much as 22.9% to 27 cents per share and that for the second quarter declined 12.8% in the last 7 days. For 2014, the Zacks Consensus Estimate sank 10.3% to $1.48 per share.

Not all defense equipment providers are performing as poorly as FLIR Systems. Some better-ranked companies in the industry that sport a Zacks Rank #1 (Strong Buy) include Alliant Techsystems Inc. (ATK - Analyst Report), BAE Systems plc (BAESY) and Orbital Sciences Corp. (ORB - Snapshot Report).

Please login to Zacks.com or register to post a comment.