Adacel’s recent share price rises hinted that good news was on its way.
And today it came in the form of a $4.2m contract with a new military customer in Central America. Adacel will install a 360-degree air traffic control (ATC) tower simulation system, ATC radar and air defence training simulators.
The contract includes its ICE communication and phraseology systems, and maintenance and support for an initial two-year period.
While it wasn't the $72m NASA contract we were hoping for, it’s still a decent contract that creates a new customer relationship and adds geographic diversity.
Adacel’s share price has popped above our $2.50 buy price, so we suggest holding off from buying for the moment. But it’s an illiquid stock that is often volatile, so we'll wait a week or so before formally downgrading it. SPECULATIVE BUY.