FLIR Systems, Inc. (FLIR - Free Report) launched Black Hornet 3 nano-unmanned aerial vehicle (UAV), targeting global militaries, government agencies and first responders. The next generation Black Hornet 3 nano-UAV is now powered with the ability to navigate in GPS-denied environments, allowing users to maintain awareness and surveillance as well as for threat detection.
The Black Hornet Personal Reconnaissance System (PRS) is already the world’s smallest combat-proven nano-Unmanned Aerial System (UAS), providing small combat units, SWAT teams and first responders with intelligence, target-acquisition and reconnaissance capability. The Black Hornet 3 now offers the lowest size, weight and heightened performance for UAS along with improved speed and distance.
Last week, FLIR Systems secured a $2.6-million order from the U.S. Army’s Soldier Borne Sensor (SBS) program to deliver the Black Hornet in a first batch order. Recently, the company will deliver the Black Hornet 3 for the Royal Australian Army and French Armed Forces.
Existing Business Scenario
FLIR Systems’ core strength in providing reliable and effective imaging as well as threat-detection technologies is expected to drive growth. Additionally, increased adoption of thermal imaging in a broad spectrum of applications, ranging from military to personal hand-held cameras and Smartphones, continues to fuel growth in this market. The company also remains extremely committed toward the introduction of innovative products to expand its customer base and strengthen foothold in new markets.
In the past six months, shares of the company have gained 20.4%, outperforming the industry’s increase of 8.7%.
Furthermore, this Zacks Rank #3 (Hold) company’s government and military business has been faring well over the past few quarters driven by its CDMQ model. Through this model, the company develops technology by investing in research & development and then equips it with military standards for sale to the government. Also, FLIR Systems has been able to combat softness in cyclical spending associated with government markets using this model. Going ahead, the company expects CDMQ model to improve prospects of its business with the government, thereby adding to its strength.
Despite these tailwinds, FLIR Systems’ gross margins are vulnerable to a host of factors, including product mix changes and manufacturing cost absorption. In addition, high manufacturing cost absorption is likely to restrict the company’s growth.
Stocks to Consider
Some better-ranked stocks from the same space are AeroVironment, Inc (AVAV - Free Report) , L3 Technologies Inc (LLL - Free Report) and CPI Aerostructures, Inc (CVU - Free Report) . While AeroVironment sports a Zacks Rank #1 (Strong Buy), L3 Technologies and CPI Aerostructures carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AeroVironment surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 147.4%.
L3 Technologies exceeded estimates in the trailing four quarters, with an average positive earnings surprise of 7.4%.
CPI Aerostructures outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 20.1%.
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