Monday, February 23, 2009

Notable Calls Network (NCN): American Science & Engineering (NASDAQ:ASEI)

Since I haven't highlighted Notable Calls Network (NCN) for a while now, I thought to give it a go.

We caught a nice mover today:

American Science & Engineering (NASDAQ:ASEI) was down today following a press release announcing the receipt of partial termination for convenience on its U.S. Government ZBV Military Trailer Order.

- The news hit around 9:42 AM ET causing the stock to slide 8 pts in little more than an hour. One can't really blame the initial (short) sellers as the Military is among ASEI's largest customers (think most of their backlog is Mil).

I did pour over the press release myself but given the fact I couldn't understand why the Military had cancelled the contract in the first place, I passed.

- Around 10:55 AM ET an NCN member pinged me saying Stifel was out defending ASEI saying the stock was down on old news:

'...We would buy the stock on the today's drop as we think the ultimate resolution of the situation will be favorable for AS&E. No change to forecasts.

On February 12, 2009, we spoke to representatives of the Department of Defense in relation to the protest of the recent award to AS&E to build 68 Z Backscatter Military Trailers (ZBMT) by Rapiscan, a division of OSI Systems (NASDAQ: OSIS). This information was published on that date.

A settlement had been reached between the Marines and OSI under which AS&E will be permitted to immediately start work on 34 ZBMTs, which should take about three months to deliver.

Marine Systems Command reviewed the terms of the solicitation and specifications, and will re-compete the remaining 34 units. AS&E's ZBMT meets the existing specs and is expected to meet any revised specifications. OSI's product did not meet the prior specs.

According to the representatives, the Marines would like to have all the ZBMTs yesterday. A spiral development program is in process to add capabilities to the ZBMT and it is possible that additional units may be added to the solicitation for the currently remaining 34 units.

It appears to us that this is not a one-shot order and that the ZBMT will likely become standard equipment for Marine units in the field and, potentially, at domestic bases. From the tone of the conversation, we sensed a high level of frustration from the representatives we spoke with. The Marines funded the R&D to develop the ZBMT and we believe the ZBMT is the system that is desired.

We strongly reiterate our Buy rating and 12-month target price of $90...'

So, over the next minutes I quickly distributed the defense to all NCN members. The call made sense & I knew it would produce a nice bounce. And it did. Depending on one's entry/exit 2-2.5 pts in profits was to be had as the defense call from Stifel spread among trading desks.

This is how Notable Calls Network (NCN) works - sharing the flow. We catch them every day.

Want to be part of NCN?

It's easy. Just shoot me a brief email that includes a short description of yourself and your AOL nickname.

Please do note that contacts via IM are limited to people with:

- 3+ years of trading experience

- Access to quality research/analyst commentary

- Ability to generate and share (intraday) trading calls

I will not accept contacts from purely technically oriented traders, penny stock fans or people who have less than 3 years of experience in the field.

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