FLIR Systems Soars on Report of Amazon Using Thermal Cameras

FLIR Systems surges on news Amazon is using thermal cameras at its warehouses.
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FLIR Systems shares  (FLIR) - Get Report surged on Monday following a news report that online retail kingpin Amazon  (AMZN) - Get Report had begun to use thermal cameras at its warehouses to accelerate screening for employees who may have contracted coronavirus.

At last check FLIR shares were trading up 15% at $39.28.

Amazon, which later confirmed use of the equipment, set up the hardware for the devices in at least six warehouses outside Los Angeles and Seattle, and the company did not disclose whose devices it was using, Reuters reported, citing unnamed employees. 

One employee at a warehouse outside Seattle said the technology came from Infrared Cameras Inc. 

"We are now implementing the use of thermal cameras for temperature screening to create a more streamlined experience at some of our sites,” Kristen Kish, an Amazon spokesperson, said in an emailed statement.. 

William Blair analyst Louie DiPalma said in a note to clients that even if the Seattle online retailer is using another company's equipment, he expected FLIR, Wilsonville, Ore., to "benefit from what may become a major trend."

"While Amazon may be using the thermal cameras to screen employees, there have been a multitude of reports of high-profile companies such as Wynn Resorts  (WYNN) - Get Report and Emirates Airlines screening customers," DiPalma said. "We have received an inbound from [a National Basketball Association] team doing due diligence."

Infrared Cameras couldn't be reached for comment. 

Employees at Amazon warehouses have complained about unsafe conditions in the wake of the coronavirus pandemic. 

Earlier this month, Amazon fired a worker who led a strike at the online retailing giant’s warehouse in Staten Island, N.Y. Amazon said the staffer had not stayed in quarantine after he'd come into contact with another staffer who was diagnosed with the virus.  

"FLIR is the global leader in thermal uncooled cameras, which compose the largest portion of the thermal camera market by volume," DiPalma wrote.

The analyst said FLIR's other competitors include Fortive  (FTV) - Get Report and Thermoteknix.  

DiPalma, who gives FLIR an outperform rating, said the company's chief executive, Jim Cannon, stated during the Feb. 27 fourth-quarter earnings call that potential sales of coronavirus-related FLIR thermal cameras were "not a needle mover." 

"However, the severity of covid-19 is now acutely worse compared with late February," DiPalma said. "With visionary industry leaders such as Amazon now planning to use thermal cameras to screen employees on a daily basis, and other companies intending to screen customers, we now believe that temperature screening sales may be a material contributor to FLIR's $1.8 billion in annual sales."

Tyson Foods  (TSN) - Get Report and Intel  (INTC) - Get Report are among other companies exploring use of thermal cameras, Reuters reported. The cameras can cost up to $20,000.