TSA removing naked scanners; OSI shares jump

January 18, 2013, 2:07 PM

The Transportation Security Agency has pulled the plug on its contract with OSI systems for controversial airport scanners that generated nude images of travelers.

Or, as the TSA puts it: “Due to its inability to deploy non-imaging Automated Target Recognition (ATR) software by the Congressionally-mandated June 2013 deadline, TSA has terminated its contract with Rapiscan.”

Shares of OSI Systems are up around 5% following the announcement late Thursday




Analyst Jeff Martin at Roth Capital Partners called the decision positive for the stock because it removes an overhang on the shares. “We view the announcement as a positive catalyst for shares, although recent strength in the stock suggests this was somewhat anticipated,” said in a research note. Martin reiterated a buy rating and $93 price target on the shares.

Analyst Tim Quillin at Stephens Inc. also views the decision as positive. “Body scanners are not a meaningful revenue contributor for OSIS and this news resolved an issue that took the stock down about 33%  in mid-November,” he said in emailed comments.

– Tom Bemis


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