Raven Partners Jatco - Analyst Blog

Raven Industries Inc (RAVN) has entered into a strategic partnership with Jacto Inc. whereby the latter would offer its expertise in factory-installed components and precision technology facilitating operators and growers in this market.

Branded as "Otmis," Jacto will offer Raven precision products including global positioning system guidance, assisted steering, and automatic section control. These products are also designed to yield an attractive return on investment.

This partnership brings together two of the major players in the application space. Raven Industries’ Applied Technology segment, which recorded double-digit revenue and a high single-digit operating profit growth, will be further poised to deliver stronger results going forward.

Management expects to boost its sales and earnings by capitalizing on energy, precision agriculture and military surveillance market opportunities. This strategic alliance thus fits in to management’s operational plans.

Raven Industries posted strong second-quarter results largely driven by higher revenues due to a surge in demand in several of its end-markets, including energy, precision agriculture, and military surveillance

The Zacks Consensus Estimate for fiscal third-quarter 2011 earnings is 43 cents per share. For full year 2011 and 2012, the Zacks Consensus Estimates are, respectively, $1.96 per share and $2.18 per share.

We maintain our “Neutral” recommendation on Raven Industries. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.