On Nov 18, 2013, we upgraded our recommendation on
Alliant Techsystems Inc.
) to Outperform from Neutral. The company currently has a Zacks
Rank #1 (Strong Buy).
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Why the Upgrade?
There are several catalysts, including Alliant's strong
performance in the second quarter of fiscal 2014, positive
impacts from the acquisition of Caliber Company and the
completion of the Bushnell acquisition on schedule, which led us
to upgrade the stock.
In the second quarter of fiscal 2014, Alliant's top as well as
bottom line surpassed the Zacks Consensus Estimate on the back of
robust contribution from its Sporting segment and a decrease in
We note that Alliant continues to strengthen product coverage
under its Sporting segment as demand for sporting products are
increasing in the U.S. Year to date, the company has completed
two significant acquisitions.
In Jun 2013, Alliant acquired Caliber Company for $315 million.
The acquired entity contributed $57 million to revenues in the
On Nov 4, 2013, the company completed the acquisition of Bushnell
Group Holding Inc., a provider of branded sports optics, outdoor
accessories, performance eyewear and affordable sports products
for the sports enthusiast. Bushnell will be merged with Alliant's
We believe that a steady strategic acquisition plan will enable
the company to strengthen its existing footprint besides
providing operational and financial synergies.
Apart from the acquisition driven growth, Alliant is continuously
winning government as well as non-government contracts. The
company has a strong alliance with the U.S. and foreign defense
establishments. During the second quarter of fiscal 2014, the
company has received a contract, worth $102.4 million, from the
U.S. Navy for the second full-rate production lot of the Advanced
Anti-Radiation Guided Missile. We believe contract awards on
regular intervals will enable the company to secure its future
cash inflow stream.
Other Stocks to Consider
Other stocks in the industry that are currently performing well
Teledyne Technologies Inc.
Lockheed Martin Corporation
), each with a Zacks Rank #2 (Buy).