Telos Corporation, a company specializing in computer-integrated systems design, has secured a major contract protest withdrawal, as disclosed by the Government Accountability Office (GAO) today.
The contract, potentially worth up to $485 million over the next five years, is part of Telos' Security Solutions business.
On March 15, 2024, Telos announced it had entered teaming agreements with prime partners awarded federal government contracts that could amount to $525 million for Telos over five years. However, these awards were contested during the standard post-award protest period.
On Wednesday, the GAO made public that the protest concerning the larger portion of the contract, worth up to $485 million, has been withdrawn. Consequently, the government's previously issued "Stop-Work Order" on this contract will be formally lifted, effective September 28, 2024, as informed by Telos' prime partner.
Another contract, which could bring Telos up to $40 million over five years, remains under protest.
In other recent news, Telos Corporation has secured a prime position on the United States Air Force's $12.5 billion infrastructure modernization contract, which could potentially add approximately $50 million of annual revenue to Telos's Secure Networks business.
This follows a series of federal government contract vehicles secured by Telos since 2023, representing an addressable market of roughly $24.5 billion. Despite this, BMO Capital Markets has lowered its price target for Telos to $3, citing concerns about extended protests and delays in securing large contracts.
On the other hand, B. Riley maintains a Buy rating on Telos and has increased its price target to $5.00. This adjustment was made after Telos surpassed its Q2 2024 financial forecasts, recording revenues of $28.5 million, largely driven by their Security Solutions and Secure Networks segments.
InvestingPro Insights
In light of Telos Corporation's recent contract developments, insights from InvestingPro provide a deeper financial perspective on the company. Telos holds more cash than debt on its balance sheet, which could indicate a strong financial position to fulfill new contracts. However, analysts have recently revised their earnings downwards for the upcoming period, signaling caution amid the company's new business prospects. Furthermore, Telos has experienced significant price volatility, with the stock taking a notable hit over the last week and month, which may reflect investor response to the contract protests and subsequent withdrawal.
From a data standpoint, Telos has a market capitalization of $228.33 million and a negative P/E ratio of -7.66, reflecting challenges in profitability. The company has also seen a revenue decline of 24.41% over the last twelve months as of Q2 2024. Despite these challenges, Telos has managed a high return over the last year, with a 62.05% price total return, which could interest long-term investors.
For those considering a deeper dive into Telos' financial health and future prospects, there are additional InvestingPro Tips available at InvestingPro Telos, which could offer valuable guidance in light of the company's current situation.
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