OSI Systems Prospects Ride on Expanding Order Book

OSI Systems OSIS is benefiting from an expanding order book across its Healthcare, Optoelectronics and Manufacturing and Security Segments.

Building on this momentum, the company recently announced that its Security division has secured an order valued at approximately $17 million from an international customer.

The order includes advanced cargo and vehicle inspection systems such as the Eagle P60 high-energy drive-through system and the T60 trailer-mounted vehicle inspection system.

OSI Systems will also provide comprehensive services, including system installation, training and multi-year service and maintenance support, underscoring its commitment to delivering integrated security solutions globally.

OSI Systems Prospects Strong

OSIS Security division saw a remarkable 60% year-over-year revenue growth in the third quarter of fiscal 2024. The uptick was primarily driven by major contracts like the $500 million deal with SEDENA (Mexico's Department of National Defense) and other international contracts for cargo and vehicle inspection systems.

Further bolstering its market presence, in June, OSI Systems announced an $11-million order for multiple units of the Eagle M60 mobile high-energy cargo and vehicle inspection system, including ongoing maintenance and support, to fulfill international border and security needs.

OSIS also announced a $10-million order for its Real Time Tomography (RTT) 110 explosive detection systems, slated for deployment at a Latin American international airport, emphasizing high-resolution 3-D imaging for efficient hold baggage screening and ongoing maintenance support.

OSI Systems exited the fiscal third quarter with a backlog of nearly $1.8 billion, particularly in the Security division. The company expects more robust performance from the Security division in the rest of the fiscal 2024.

The strong order book is expected to benefit OSIS's top-line growth. For the fiscal 2024, revenues are expected to increase more than 19% over fiscal 2023 levels, while earnings are expected to increase more than 29% year over year.

The Zacks Consensus Estimate for fiscal 2024 revenues is currently pegged at $1.52 billion, indicating 19.24% growth year over year. The consensus estimate for earnings is pegged at $8.09 per share, unchanged in the past 30 days and indicating year-over-year growth of 30.27%.

Zacks Rank & Stocks to Consider

Currently, OSI Systems carries a Zacks Rank #3 (Hold).

Shares have increased 6.9% year to date compared with the Zacks Computer and Technology sector's rise of 29.2%.

Some better-ranked stocks in the broader technology sector are Arista Networks and Dropbox, each sporting a Zacks Rank #1(Strong Buy), while Garmin carries a Zacks Rank #2 (Buy) at present.

Arista Networks' shares have gained 57.6% in the year-to-date period. The long-term earnings growth rate for ANET is pegged at 16.07%.

Garmin's shares have gained 25.7% in the year-to-date period. The long-term earnings growth rate for GRMN is pegged at 8.04%.

Shares of Dropbox have declined 24.6% in the year-to-date period. The long-term earnings growth rate for DBX is pegged at 11.44%.

To read this article on Zacks.com click here.