FLIR jumps on upgrade following military contract

FLIR said Wednesday it won a $358.4 million contract to supply a sensor system to the U.S Army and Missile Defense Command in Huntsville, Ala.

The contract is a modification to an existing indefinite quantity agreement with the Army.

Shares rose $2.73, or 7.8 percent, to $37.60. The stock earlier traded as high as $38.76, eclipsing a previous year high of $36.79 set on Monday.

Boenning & Scattergood analyst Michael F. Ciarmoli said the contract was among two major U.S Army contracts FLIR has won in the past few days that could have a collective value in excess of $400 million.

He upgraded the company to "Market Outperform" from "Market Perform" and introduced a $42 price target.

William Blair & Co. analyst Jeff Rosenberg said FLIR's $358.4 million contract was the biggest it ever received.

While it was early in the process, Rosenberg believes that a portion of the contract is likely to be awarded in 2008 with the balance coming in 2009. The gain could boost earnings per share by 35 cents to 40 cents, he said.