Innovative Aerosystems (ISSC) dived 6% in pre-market trading today after it sealed an asset and license deal with Honeywell International (HON).
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Legacy Aviation Products
ISSC, which specializes in the engineering, manufacturing and supply of advanced avionic solutions, said it had entered into an asset purchase and perpetual license agreement with Honeywell for certain aftermarket parts, intellectual property and program assets associated with select legacy Honeywell avionics products.
Under the terms of the agreement, ISSC acquired certain contracts, OEM and aftermarket production and repair, as well as specialized tooling and test equipment from Honeywell for supporting legacy navigation/communication radios, autopilot systems, and transponder technologies installed across a wide range of general aviation aircraft.
Hails Strategic Expansion
ISSC hailed a strategic expansion which “strengthens its ability to provide long-term sustainment, engineering support, and supply continuity for operators, maintainers, and OEM partners worldwide.”
“This transaction expands our integrated cockpit avionics solutions platform and enhances our full life-cycle support and engineering capabilities for a growing base of global aviation customers,” said Shahram Askarpour, Chief Executive Officer of Innovative Aerosystems. “These systems continue to play an important role in enabling safe navigation, communication, situational awareness, and automated flight operations for thousands of aircraft. Integrating this portfolio into our organization allows us to enhance reliability, improve service responsiveness, and invest in future modernization pathways.”
No financial details were given by either company, which may explain the negative reaction from shareholders. The acquisition of legacy assets may also have failed to thrill investors more focused on innovation.
ISSC will hope that the move will give more lift to its share price, which is already up 231% over the last 12 months. Much of that, according to analysts, is down to the company’s retrofit focus and ability to serve aging aircraft fleets. This, they say, creates an addressable market that larger competitors tied to original equipment manufacturers cannot easily access.
Is ISSC a Good Stock to Buy Now?
On TipRanks, ISSC has a Moderate Buy consensus based on 2 Buy ratings. Its highest price target is $34. ISSC stock’s consensus price target is $29.50, implying a 34.58% upside.
