Benchmark Gives Color on FLIR Systems After Lowered Outlook in FY11

Benchmark has published a report on FLIR Systems FLIR after a reduction in government spending. In the report, Benchmark wrote, "Weak Q2 from a 19% decrease in Government, excluding ICx Technologies. FLIR pre-announced revenue of $390 million and adjusted EPS of $0.35 last week, below consensus estimates of $410 million and $0.39. On Friday FLIR reported full results; Government revenue was $175 million, up 4% y/y, but down 19% y/y excluding ICx. Lowered FY11 guidance implies 5%-12% contraction in organic Government this year. FLIR lowered its FY11 revenue guidance by $100 million to $1.60-$1.65 billion and adjusted EPS by $0.20 to $1.50-$1.55, entirely due to delays and weakness in Government; FLIR's Commercial outlook remains unchanged and strong. The new guidance represents 15%-19% top-line growth, but flat to negative earnings growth from last year of $1.55. The new guidance range implies 5%-12% of contraction in organic Government revenue, assuming $160 million in revenue from ICx and 27% growth in Commercial (18% organic growth + $185 million in Raymarine)." Benchmark rated FLIR Systems a HOLD with a price target of $28.00. FLIR Systems closed Friday at $28.81.