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Shares Of Applied Signal Jump After 2Q Results

The Associated Press

HARTFORD, Conn. (AP) — Shares of Applied Signal Technology Inc. soared Wednesday, a day after the manufacturer of intelligence, surveillance and reconnaissance products said its profit more than doubled in the fiscal second quarter.

Analyst James McIlree of Collins Stewart raised his 2009 profit estimate, saying the Sunnyvale, Calif., company has a strong mix of products and is cutting costs. McIlree increased his estimate to $1.09 per share from 85 cents and raised his revenue estimate to $210 million from $193 million.

Analysts surveyed by Thomson Reuters expect earnings to be 91 cents per share on revenue of $202.5 million.

Shares jumped $3.60, or 16 percent, to $25.59 in morning trading.

Applied Signal's business has improved with the introduction of new products for manned and unmanned air, sea and ground vehicles "and will provide growth as well as margin improvement in the coming quarters," McIlree said in a note to investors.

William Van Vleet, Applied Signal's president and chief executive, said in a conference call Tuesday that programs such as an aerial sensor could be delayed a few months.

"Even so, we believe that the recent increase in demand in our core business provides the diversification necessary to offset any delays that we see on the horizon," he said.

McIlree said such delays are common and typically affect smaller contractors, such as Applied Signal, rather than larger companies.

"While the earnings surprise could lead to some celebration, the push-outs of the company's major program pursuits could temper that enthusiasm," he said.

Analyst Patrick J. McCarthy of FBR Capital Markets raised his price target to $26 from $21.

"We believe that Applied Signal is continuing its multi-quarter turnaround, and these results, in our view, reflect that," he said in a note to investors.

Applied Signal said Tuesday it earned $4.1 million, or 31 cents per share, compared with $2 million, or 16 cents per share, in the second quarter of 2008. Its revenue rose 18 percent to $53.5 million from $45.3 million.

The results exceeded Wall Street estimates. Thomson Reuters said analysts expected a profit of 20 cents per share and $49 million in revenue for the quarter ended May 1.