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Irvine Sensors
(NASDAQ: IRSN) Trading Alert - It's Deja Vu All Over Again? |
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Three weeks ago on March
31st we published an edition which featured news that the company's
founder and President, John Carson, had used his own retirement funds to
finance one-third of a $780,000 private placement in Irvine Sensors
stock.
The market responded to this implied
endorsement of the company's future by bidding the stock up about 30% on
three times normal volume. Since then the stock has settled back down into
its quiet trading range in the $1.10 to $1.25 range.
Today, just after the market closed,
Irvine
Sensors issued a press release which explains Mr. Carson's commitment
to the company. This is welcome news, albeit several months after we expected
it to happen, should send the stock rocketing up the charts in short order.
Irvine Sensors announced it
had been awarded Department of Defense contracts which could
add up to a total of $13 million over the coming months,
with the first $5 million of $6 million already awarded and
received. This is the largest contract announcement in the company's 20
year history.
Irvine Sensors' proprietary
chip stacking technology provides super computing power that is small,
lightweight, and requires minimum power. Therefore, it is ideally
suited for new military and homeland security applications.
About one year ago shares of Irvine
Sensors began climbing the charts as news unfolded the Department
of Defense had awarded Irvine Sensors several development contracts
which ended up equating to just under $10 million in sales.
The company's revenues then increased 70% per quarter for three consecutive
quarters, taking revenue levels to the highest in history.
As you can see from the chart which
displays the action in the stock at that time, shares ran rapidly from
a $1 support level in mid April of 2002 to challenge the $3.50 range
by mid May- a whopping 350% return if you had been nimble
enough to trade it at the extremes.
Today's news is even more prolific.
After a year in development, the Department of Defense is signaling
both the company and investors it wants to push on with these programs,
and the initial commitment is 30% greater than last year at this time.
In our opinion, today's news virtually
assures Irvine Sensors will be able to report several consecutive
quarters of explosive growth beginning in the June time frame. March quarterly
results will probably be anemic, as these contracts were expected earlier
in the year and probably won't be reflected until June numbers come out.
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Trading
Alert- Is it Deja Vu All Over Again? |
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Shares of Irvine Sensors have
been languishing lately in the absence of positive fundamental developments.
Today's news after the bell changes the picture completely. In fact, today's
news is stronger than the DOD news one year ago. Last year's contract
award could have been an isolated event and investors had no assurances
the development contracts would lead to bigger and better revenue flow.
The new DOD contracts send a clear
signal to investors. The DOD most likely intends to use Irvine
Sensor's technology in the next generation of military and homeland
security applications. We don't know what it will mean long term to the
company and how long it will take - will it yield hundreds of millions
in revenues, or much more benign results?
Time will tell. Where the stock trades
from today's closing levels is anybody's guess. A repeat of last year's
performance in this exact time frame would provide a short term target
of $3.50. However, after a year of false starts investors might
not be willing to chase this stock up to past levels.
Of far greater importance in the
long term picture is a more continuous flow of fundamental news. Today's
news release provides little disclosure concerning the nature of these
development contracts. The company informs us many specific permissions
are required from various governmental entities before they can provide
more disclosure on the specific products under development. Therefore we
can't realistically evaluate their long term upside potential for shareholders.
Irvine
Sensors intends to provide more disclosure as permissions are received.
You should expect the stock to gap
up dramatically on the open. We anticipate it will trade no lower than
$1.75
in the early going. If the stock can get some momentum you could see much
higher levels in the near future, particularly if we get some follow up
information from Irvine Sensors.
We are not recommending a stop loss.
If you are just looking for a trade use your own judgment. There are about
10 million shares issued and outstanding, equating to a market valuation
of only $12 million based on today's closing price of $1.19.
Moreover, the previous high for this stock, set in the March 2000 time
frame, was $360 per share. Can you spell upside potential??
The company achieved about $18 million
in revenues over the past four quarters. An additional $13 million in contracts
could have a huge impact on the company's fortunes.
Despite continuing ongoing small
losses, the stock is now trading substantially below one times annual revenues,
leaving a great deal of room for upside price appreciation. Furthermore,
their significant involvement in the burgeoning demand for the next generation
of high tech weaponry and homeland defense spending makes Irvine Sensors
an exciting speculative holding for the long term. Another words- don't
be afraid to hold this one.
Here is the complete text of today's
news release for your review:
| Press Release Source:
Irvine Sensors Corporation
Irvine Sensors Announces
Government Contracts
Wednesday April 23, 4:07
pm ET
Awards Total Approximately $6 Million
With $7 Million More in Potential Options
COSTA MESA, Calif., April
23 /PRNewswire-FirstCall/ -- Irvine Sensors Corporation (Nasdaq: IRSN;
Boston Exchange: ISC) announced today that it has recently received several
government R&D contract awards, with an aggregate value of approximately
$6 million, approximately $5 million of which has been initially funded.
In addition, these contracts include optional tasks that could increase
the aggregate contract value by approximately $7 million, largely in fiscal
2004, if funded by government customers.
Robert G. Richards, Irvine
Sensors CEO said, "Included in these awards are the contracts that we suggested
were pending in our first quarter earnings webcast. Because receipt of
these contracts was delayed until just recently, they made little or no
contribution to our second fiscal quarter ended March 30, but their potential
positive effect on revenues in the current and subsequent periods is welcomed.
In addition, they all relate to our primary technology development thrusts,
high-density electronics and imaging systems, and support our planned roadmaps
to eventual products in those areas."
Irvine Sensors Corporation
( www.irvine-sensors.com ) and its subsidiaries, headquartered in Costa
Mesa, California, are primarily engaged in the development and production
of high-density electronics, image processing and sensing devices, and
low power integrated circuits which are intended to have broad applications
in military and commercial systems.
Safe Harbor Statement
under the Private Securities Litigation Reform Act of 1995: This message
may contain forward-looking statements based on our current expectations,
estimates and projections about our industry, management's beliefs, and
certain assumptions made by us. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," "may," "will" and
variations of these words or similar expressions are intended to identify
forward-looking statements. These statements speak only as of the date
hereof and are subject to change. We undertake no obligation to revise
or update publicly any forward-looking statements for any reason. These
statements are not guarantees of future performance and are subject to
certain risks, uncertainties and assumptions that are difficult to predict.
Therefore, our actual results could differ materially and adversely from
those expressed in any forward-looking statements as a result of various
factors.
Important factors that
may cause such a difference include, but are not limited to, the competitive
funding pressure on R&D contract funding resulting from demands of
current military operations; competition from other vendors; our ability
to successfully execute these contracts on a timely basis and in accordance
with the government's specifications; the government's ability to change
its specifications over time; general economic and political conditions
and specific conditions in the markets we address; and the recent significant
economic slowdown. Further information on Irvine Sensors Corporation, including
additional risk factors that may affect our forward looking statements,
is contained in our Annual Report on Form 10-K, our Quarterly Reports on
Form 10-Q, our Current Reports on Form 8-K and our other SEC filings that
are available through the SEC's website ( www.sec.gov ).
--------------------------------------------------------------------------------
Source: Irvine Sensors
Corporation |
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Journal and not familiar with Irvine Sensors, now would be a
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