FLIR Shares Rise After Analyst Says $70 Billion War Funding Approval

Shares of FLIR Systems jumped in afternoon trading Friday, after an analyst the recent government approval of $70 billion in additional funding for wars in Iraq and Afghanistan should help the infrared camera maker grow.

The stock rose $2.03, or 6.6 percent, to close at $32.59. The stock has ranged from $14.81 to $36.42 over the past year.

The extra funding includes $340 million for the Ground-Based Operational Surveillance System, or G-BOSS. G-BOSS is an important revenue source for FLIR, and one that should garner it $145 million in revenue, Thomas Weisel Partners analyst David Gremmels said in a note to investors.

Additionally, the original funding bill for the wars included $640 million for G-BOSS, of which $130 million could go to FLIR, Gremmels said.

As a result of the additional revenue, Gremmels now expects 2008 profit of $1.28 per share on revenue of $1.07 billion, up from a previous estimate of $1.25 per share profit on revenue of $1.05 billion.

Analysts polled by Thomson Financial, on average, expect profit of $1.10 per share on sales of sales of $944 million.

Gremmels also raised his share price target to $41 from $38.50.

“We see scenarios in which FLIR’s 2008 revenue and earnings could come in far above the current consensus,” Gremmels said in a client note. “We note that FLIR’s commercially focused business model means that incremental margins can be very high.”

The company will more than likely issue 2008 guidance in line with Wall Street, and is expected “raise the bar” throughout the year as additional revenue becomes available, according to Gremmels.

Additionally, a dispute between Raytheon and L-3 Communications on the Common Sensor Payload for the U.S. Army should work to FLIR’s advantage, as the delay keeps FLIR’s products on Army helicopters longer, Gremmels said.