Israeli high-tech company, Elbit Systems, announced on Feb. 7 that it had been awarded two separate contracts worth a combined value of $128 million.
The first of these contracts, worth $82 million, was awarded by BAE Systems Hägglunds and will see Elbit Systems help modernize the operational and protection systems of the Royal Netherlands Army (RNLA).
The modernization program will take place over a four and a half-year period and Elbit Systems (ESLT) will equip armored combat vehicles of the RNLA with ‘Iron Fist’, a lightweight system that uses optical sensors, tracking radars, launchers and countermeasure munitions to defeat threats at a safe distance.
General Manager of Elbit Systems Land, Yehuda Vered, said, “We are pleased with the opportunity to cooperate with BAE Systems Hägglunds and to support this important modernization program of the RNLA.”
In a separate deal, Elbit Systems was also awarded a $46 million contract to supply Armored Personnel Carriers (APC) over the next three years to the army of an un-named country in Asia-Pacific.
The APCs were developed by Iveco Defence Vehicles together with the Brazilian Army, and Elbit will install a range of the company’s sub-systems to enhance the vehicles’ capabilities.
Commenting on the deal, Yehuda Vered said, “We believe that our strong portfolio of subsystems positions us advantageously to lead procurement programs of armored vehicles, especially as the missions they are tasked with become more diverse and increasingly networked.” (See Elbit Systems stock analysis on TipRanks)
Jefferies analyst Sheila Kahyaoglu downgraded Elbit to a Hold from a Buy three months ago and reduced her price target to $130 from $165. This implies downside potential of around 8% from current levels.
Kahyaoglu told investors that the bull-case for ESLT has been that its global diversified customer base offers opportunity for Maritime Security & Defence (MSD) growth regardless of potential defense headwinds in certain regions, but the effects of the coronavirus pandemic no longer support her bull-case scenario.
Elbit receives a market neutral 7 out of 10 Smart Score, which implies that the company is expected to perform in line with market expectations.