Our Stocks – EarlyBirdCapital Universe of Coverage
The names listed above are names we do not cover from an official research standpoint. That said, we have a unique and robust list of cyber pure plays a large concentration with customer concentration among the Federal government. We believe this exposure positions our stocks better than many as the money for cyber will be directed form the federal government; directing our universe of coverage.
Boeing (Recommendation: BUY, $90 Target): is a leading aerospace company and the largest manufacturer of commercial jetliners/military aircraft combined. Additionally, BA designs and manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. The company also provides numerous military and commercial airline support services. We would argue, cyber is a small component of BA’s, but a focus none-the less, especially with the recent acquisition of Argon ST (completed August 2010). Management estimates that cyber activities account for about $1 billion of revenues. Clearly we do not consider BA a cyber pure play, but is a significant player in cyber none-the-less, within our universe of coverage.
CACI International (Recommendation: BUY, $66 Target): provides information systems, and technology and professional services to the U.S. government, agencies of other governments, state and local governments, and commercial enterprises in North America and internationally. This is an example of a name where cyber runs through most of everything the company does.
Dynamics Research (Recommendation: BUY, $17 Target): provides management consulting, engineering, technical, and information technology (IT) services and solutions to federal and state governments. Cyber is expected to be about 4% of 2011E revenue, or about $11 million.
ManTech International (Recommendation: BUY, $60 Target): leading provider of innovative technologies and solutions for mission-critical national security programs for the intelligence community; departments of Defense, State and Homeland Security; the Department of Justice and the Federal Bureau of Investigation; the space community; the National Oceanic and Atmospheric Administration; and other U.S. federal government customers. MANT’s expertise includes command, control, computers, communications, intelligence, surveillance and reconnaissance (C4ISR) lifecycle support, cyber security, global logistics support, intelligence/counter-intelligence support, information technology modernization and sustainment, systems engineering, and test and evaluation. Cyber here runs less than 10% of total revenues or about $200 million per year.
NCI (Recommendation: BUY, $27.00 Target): provides information technology (IT), engineering, logistics, and professional services and solutions to federal government agencies. This is an example of a name where cyber runs through most of everything the company does.
SAIC (Recommendation: HOLD): provides scientific, engineering, systems integration and technical services and solutions to various branches of the U.S. military, agencies of the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security and the other U.S. government civil agencies, state and local government agencies, foreign governments, and customers in select commercial markets. SAI estimates cyber work runs at about $750 million to $1.5 billion of annual revenues.
SRA International (Recommendation: HOLD): provides technology and strategic consulting services and solutions to national security, civil government, and global health sectors in the United States and internationally. SRX is currently in the process of being taken private by Providence Equity Partners, implying we will see this name again in some shape in about 3-5 years. Cyber revenue is hard to measure as it is such a large component of most contracts, but we estimate about 10-15% of revenues are cyber, or about, or about $270 million.
As demonstrated, there are many interesting ways to play this threat and we are confident this will not be our last update. Opportunities will present themselves, especially, as many of the core elements of cyber (data mining, security, etc) are hard to isolate out of the cyber component as it represents the backbone of most technology companies.