Why OSI Systems' Shares Jumped
Jun 21st 2013 4:30PM
Updated Jun 21st 2013 4:32PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of electronics systems designer OSI Systems jumped as much as 21% in afternoon trading after reaching a settlement with the government.
So what: Management said it had reached a settlement with the Department of Homeland Security over issues with its Rapiscan passenger scanning product and its software. The deal will allow the company to continue other work for the U.S. government, and bid on projects in the future.
Now what: The issues with Rapiscan had led to the Department of Homeland Security proposing a suspension of any other selling activity to the agency by the company, which would have been a huge blow. This agreement lifts that cloud, although we know very little about what the agreement entails. I don't think this is a buy sign with government spending falling, but it's a positive development nonetheless.
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