The Electro Optic Systems Hldg Ltd (ASX: EOS) share price suffered a rocky end to last month following its strong start. Electro Optic shares finished June at $4.68, despite reaching prices above $6.60 during the month.
Since the end of June, the company’s share price has risen on the back of a recent announcement confirming negotiations were underway for a major new contract with the Australian Government.
What does Electro Optic Systems do?
Electro Optic Systems specialises in three sectors:
- Defence: Electro Optic Defence Systems specialises in technology for weapon systems optimisation and integration, as well intelligence, surveillance and reconnaissance for land warfare. Its most notable products are its vehicle turrets and remote weapon systems.
- Space: Electro Optic Space Systems specialises in applying optical sensors to detect, track, classify and characterise objects in space. It can be applied both for military and commercial applications. Electro Optic technology played an integral part in the successful launch of the SpaceX rocket.
- Communication: Electro Optic Systems provides global satellite communications services and systems.
What influenced the Electro Optic System share price?
There was very little news out of Electro Optic over the month of June, which ended up being a month of two halves. Electro Optic traded very strongly at the start of the month after news in late May that it had completed the acquisition of satellite communications business, Audacy Corporation, before falling away strongly towards the end of the month.
The Electro Optic share price had dropped as low as $2.98 during the coronavirus pandemic, as military spending was diverted elsewhere. However, the Electro Optic share price steadily climbed through May and early June as news of the acquisition landed.
After reaching a high of $6.60 during early June, the return of volatility to the markets saw the Electro Optic share price reversing those gains and plunging to a low of $4.68. This was despite news of the company being added to the S&P/ASX 200 Index (ASX: XJO).
What now
Recently, Electro Optic Systems announced it had entered into contract negotiations for a deal with the Commonwealth of Australia for the acquisition of 251 remote weapon stations and related material. This sent the Electro Optic share price flying up to prices of $6.56, however it has since dropped back to a price of $5.41 at time of writing.
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More reading
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- EOS share price on watch following defence spending talks
Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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