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WIKI ANALYSIS
KEYW Holding (NASDAQ:KEYW) provides cybersecurity to U.S. government agencies, primarily in the defense and intelligence departments. [1] KEYW recently went public, posting its IPO in September of 2010 - since then, KEYW relies primarily on two segments: services and products.[2] Like other companies that compete for government contracts in the fields of national security, KEYW operates in a business environment defined by two opposing trends and forces. First, defense and intelligence contracting is always in high demand - the U.S. government spends nearly a trillion dollars a year on defense spending. Conversely, government expenditures may decrease in the face of continuing economic concerns and cutting bloated defense contracts may be appealing to lawmakers.
Business Growth
The company's initial public offering of stock on the NASDAQ and occurred on September 30, 2010. Its initial price range was $10-$12, and the stock priced at the bottom at $10. The company sold 9.1M shares and raised $91M. The lead underwriter was Suntrust Robinson Humphrey.[3]
The company has strategically acquired certain companies in an attempt to build a single unified platform. In particular, it acquired TAG and IIT in February and March respectively.[4] These acquisitions augmented KEYW's traditional flows of revenue: services and products.[2]
Trends and Forces
Defense and Intelligence Contracting Enjoys Historically High Demand
In the aftermath of the September 11, 2001 terrorist attacks, the U.S. defense and intelligence services grew dramatically. As of 2010, the U.S. defense budget nears one trillion dollars, nearly doubling its decade-ago figures. As such, KEYW enjoys the reliability of government spending on defense issues and counterterrorism efforts.[5]
Revenue Contingent on Continued U.S. Government Spending
Almost all of KEYW's revenue come from contracts with the U.S. government, especially in defense and intelligence. As U.S. economic concerns continue, lawmakers may be inclined to cut into the near trillion dollar U.S. defense budget. Such cuts would have second and third order effects in the private consulting industry, especially on companies such as KEYW that are reliant upon contracts for their revenues.
Competition
KEYW competes in a largely saturated, private industry that provides consultation services for the U.S. government. KEYW's main competitors include Booz Allen Hamilton (BAH), SAIC (SAI), Lockheed Martin (LMT), and Raytheon Company (RTN).
References
- ↑ KEYW S-1/A 2010 "Prospectus Summary" pg. 1
- ↑ 2.0 2.1 KEYW Announces First Quarter Earnings
- ↑ Renaissance Capital - IPO "KEYW Holding prices IPO at $10.00, low end of the range" 1 Oct 2010
- ↑ KEYW S-1/A 2010 "SUMMARY CONSOLIDATED FINANCIAL DATA" pg. 8
- ↑ 3 Stocks to Beat a Recession
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