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FLIR Systems Inc. (FLIR - Free Report) has been awarded a delivery order by the U.S. Army to provide Star SAFIRE® II stabilized multi-sensor systems worth $20.9 million. The system is being ordered to support the Army's MEDEVAC program. This order is for the Army MEDEVAC UH-60 Blackhawk helicopters being used in Iraq and Afghanistan.

The order will be executed by FLIR from its facility in Wilsonville, OR and within the next twelve months all deliveries under the contract is expected to be completed. The U.S. Army MEDEVAC program engages in rescue and evacuation of wounded service members and FLIR has been providing support to this program through provision of its supplier of reliable, high performance imaging systems.

The company has developed extensive competencies in the design and integration of numerous capabilities and payloads into integrated systems or sub-systems. Competencies such as stabilization, packaging and systems integration will allow it to effectively combine wide variety of technologies and payloads for designing and manufacturing complex systems to suit its customers’ needs.

However, FLIR derives significant revenue from contracts or subcontracts with the U.S. government agencies. A significant reduction in the purchase of its products by these agencies would have an adverse impact on its business.  The funding of contracts awarded to the company depends on the overall budget of the United States government and appropriation process, which is beyond its control. Major competitors of FLIR Systems are L-3 Communications Holdings Inc. (LLL - Free Report) and Lockheed Martin Corporation (LMT - Free Report) .

FLIR Systems Inc. is a leader in design, manufacture and marketing of thermal imaging systems. Its products are used in a wide variety of applications, such as commercial, industrial and government markets, both internationally as well as domestically. It offers a wide variety of system configurations to suit specific customer requirements. The company’s business is organized into three divisions: Government Systems, Commercial Vision Systems and Thermography Products.

We currently maintain our Underperform rating on FLIR System with a Zacks #4 Rank (short-term Sell recommendation) over the next one-to-three months.

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