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FLIR Systems Buys Prox Dynamics to Boost Surveillance Unit

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Leading thermal imaging camera maker, FLIR Systems, Inc. , recently announced the completion of the buyout of nano helicopter technology firmProx Dynamics AS, for roughly $134 million in cash. Prox Dynamics will be integrated in FLIR Systems’ unmanned aerial systems (UAS) business within the Surveillance segment.It will leverage Lepton technology to expand the airborne sensor product line.

Encouragingly, FLIR Systems' shares have recorded an average return of 16.4%, almost double of the Zacks categorized Electronics-Military Systems Market industry average of 8.8%. The Zacks Consensus Estimate of $1.61 trend has remained unchanged over the past two months at $1.61.

Founded in 2007, Prox Dynamics AS develops nano-class UAS for a variety of applications, including military & para-military intelligence, surveillance and reconnaissance. Prox Dynamics’ Black Hornet aerial sensor and hand controllers can provide soldiers significant advantage in situational awareness and mission planning.

Some of the noteworthy features of Black Hornet drone include FLIR Systems' Lepton micro thermal camera, visible spectrum cameras, advanced low-power rotor technology and proprietary software for flight control and stabilization. Leveraging on FLIR Systems’ Lepton sensor, Prox Dynamics has developed a comprehensive solution for advanced intelligence, surveillance, and reconnaissance.

Going forward, FLIR has plans to invest in Prox Dynamics’ Personal Reconnaissance System to bolster their range, cost, flexibility, and performance, which in turn is an ideal springboard for the further growth of Surveillance segment.

FLIR Systems has been diligently pursuing strategic acquisitions to boost its core and non-core business and this is the second acquisition during the fourth-quarter, since it inked an agreement to buy Point Grey Research, Inc. The company believes Point Grey Research buyout can translate into great growth prospects as machine vision and retail people counting are attractive end-markets and are somewhat underpenetrated application spaces for thermal imaging technology.

The recently acquired firm, Prox Dynamics follows FLIR Systems’ commercially developed, military qualified model, which has been a major profit churner for the company. Through this unique model, the company develops technology by investing in research & development, and then equips it with military standards for sale to the government. Using this model, the Zacks Rank #3 (Hold) company has been able to combat softness in cyclical spending associated with government markets.

Stocks to Consider

Other favorably placed stocks in the broader sector include Arotech Corp. , Northrop Grumman Corp. (NOC - Free Report) and Engility Holdings, Inc. . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arotech Corporation makes zinc-air batteries for military and homeland security applications. It also provides advanced high-tech multimedia training systems for law enforcement and paramilitary organizations. The company has beat earnings twice in the past four quarters and has a whopping average positive surprise of 265.3%.

Falls Church, VA-based Northrop Grumman Corp. supplies a broad array of products and services to the U.S. Department of Defense (DoD). The company has managed to beat earnings each time in the trailing four quarters, boasting an average surprise of 8.3%.

Engility Holdings is engaged in providing government services in engineering, professional support and mission support to customers in the U.S. Department of Defense, Federal civilian agencies and allied foreign governments. The company has a striking earnings surprise history over the trailing four quarters, beating estimates all through. It boasts an average positive surprise of 23.2%.

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