Shares Of Applied Signal Jump After 2Q Results

"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.