Analyst Robert Stone says the fourth quarter upside is attributable to a steep revenue ramp and lower operating costs. Stone raised the $3.25 2002 earnings per share estimate to $3.55; and sees $3.40 for 2003. Stone notes InVision is one of the only two FAA-certified suppliers of explosives detection systems (EDSs): If the company receives 50% of expected 2003 funding under the Transportation Security Act, it would boost 2003 earnings per share by 75 cents.
Stone thinks InVision is trading at only eight times his 2003 earnings per share estimate due to uncertainty of the market size, and what will happen after big deployment of EDSs. He thinks demand for EDSs is rising, and sees foreign opportunities. Stone reiterates his outperform rating.