Electro Optic Systems acquires US Space Business (ASX: EOS)

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ASX EOS - Electro Optic Systems Share Price Up
Electro Optic Systems acquires US Space Business (ASX: EOS)

Dear Reader,

It’s got a market cap of over $1 billion…

The EOS share price is up over 6% today, while the broader market is down…

And the company also has a contract with the department of defence!

If that isn’t already exciting you, maybe this will…

The company recently acquired a US space communications business.

Yep, that’s what Electro Optic Systems Holdings Limited [ASX:EOS] told the market today.

If you’re not familiar with EOS. Let’s take a look…

Who is Electro Optic Systems Holdings Limited (ASX:EOS)

EOS is an interesting company on the ASX, they develop and produce products for the aerospace market.

All its research and development is done through an internal program.

It works on software, lasers, optics, gimbals and telescopes to name a few.

According to EOS they operate in the defense and space industry.

The company’s defence segment develops and manufactures several products.

I’m talking the R150, the R600 and even the T2000 — model numbers for military grade weapons.

The company also works on surveillance and fire control.

They’ve also got an interesting space development segment that covers missile defence and space situational awareness…

But more importantly, a space debris management system. This technology helps to find debris in Earth’s orbit.

It’s not in full operation just yet. But it’s expected to be up and running by 2022.

The stock price chart for EOS looks good

So, what does all this mean, and should you buy EOS?

Well, before you can answer that we need to look at two more things.

In November 2019, EOS issued a guidance and equity raising update.

The company was forecasting 2019 EBIT of $20 million.

The company surprised the market though for its 2020 forecasts…it raised them from $29 to $33–35 million.

While it issued positive news about the company’s earnings, the company also announced a capital raising.

Companies do this from time to time when they need capital to expand.

The company was looking to raise $10 million. Instead it raised $17 million from shareholders and another $68 million from institutional investors!

I guess someone likes what EOS has to offer!

Now for the chart. Take a look below.

Port Phillip Publishing

Source: TradingView

[Click to open in a new window]

It’s a weekly chart and goes back over the last year.

On the chart I’ve marked some important announcements as I wanted to see how investors reacted to each one.

As you may know, the emotion of the investors can be seen in the chart.

It’s always good to look at it and overlay this onto the chart.

Anyway, long story short…

If investors continue to like the long-term story of EOS, you may see the share price continue to rise.

Nothing is for certain, but I’ve got this company on my watch list.

As always, this is not a recommendation to buy or sell EOS. It is an update only. I hope you found it useful.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

PS: If you want to keep up to date on what’s happening in the stock markets and a whole lot more, subscribe to the Profit Watch newsletter here.