I asked them about that once before and was told that due to the government budgetary process, heaviest bookings usually do come in during the fourth quarter. I tend to agree with them and think that the price action of the last couple of days has been due to the market in general; overall, it was the largest one-week drop in history.
I also noted that Cowen reiterated the "buy" recommendation this week with a 6-12 month target of $18.
Text follows:
Applied Signal is a leader and the only "pure" play in signal reconnaissance, a field growing rapidly on the heels of the boom in wireless telecommunications. With prospects for healthy 15-20% revenue and double-digit EPS growth, yet trading at only $12 or an 11.1X CY98 P/E, a 52% discount to the S&P's 22.9X, APSG appears to be a terrific opportunity. Demand for APSG's signal reconnaissance equipment - products that can collect, process, evaluate and store wireless telecommunications signals - has several key drivers: 1) the explosive growth in worldwide wireless communications, 2) a smaller defense budget, where technology is being used to replace diminishing manpower, 3) the increase in potential U.S. threats overseas, 4) a growing presence of signal recon add-ons on larger programs, and 5) the lessening of restrictions on international sales. Furthermore, a change in strategy away from less promising commercial venues and a more aggressive approach to operational controls have enabled APSG to deliver six consecutive glitch-free quarters that met or beat expectations, thereby reducing risk of earnings disappointment, which had been an issue. Assuming a modest 70% relative 1999 P/E, we have a 6-12 month price target of $18, +50%.
-Heidi Wood, Cai von Rumohr, 7/13 |
