Electro Optic Systems (ASX:EOS) share price surges higher on $94 million government contract

The Electro Optic Systems Hldg Ltd (ASX:EOS) share price is surging higher on Wednesday after concluding contract negotiations with the government…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Electro Optic Systems Hldg Ltd (ASX: EOS) share price is surging higher on Wednesday morning following the release of a positive announcement.

At the time of writing the aerospace and defence-focused technology company's shares are up 7% to $5.94.

This compares to a 0.7% decline by the S&P/ASX 200 Index (ASX: XJO).

View of hand holding pen signing new deal with glasses sitting on table next to contract papers.

Image source: Getty Images

What did Electro Optic Systems announce?

Investors have been buying the company's shares today after it provided an update on the contract negotiations it entered into with the Commonwealth of Australia in July for the acquisition of 251 Remote Weapon Stations and related materiel.

According to today's release, the company has completed contract negotiations with the government for the aforementioned weapon stations.

The release explains that the contract is valued at over $94 million. Management notes that it will not only enhance Australian Army capability and secure EOS' supplier base, it will also boost Australian jobs and create opportunities for small businesses.

The contract finalisation includes $28.5 million of cash flow to Electro Optic Systems in the fourth quarter of 2020. This will assist in securing the EOS Australia supply chain, consisting of 146 small businesses and over 1,100 employees.

It also advised that the 251 Remote Weapon Stations will be integrated on to Bushmaster and Hawkei protected mobility vehicles. Forty Remote Weapon Stations are scheduled for delivery in the fourth quarter of 2020, with the remainder to be delivered in 2021.

What are Remote Weapon Stations?

Electro Optic Systems' offers a wide range of fully stabilised remotely operated weapon stations that can be integrated onto various vehicle platforms and used for different mission profiles.

Its remote weapon systems ensure full weapon readiness while the crew operate the system protected within the vehicle. All its stations have been designed with a high level of commonality and modularity to offer users a flexible firepower solution.

James Mickleboro 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.

More on Share Gainers

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face.
Share Gainers

3 ASX 200 shares tipped to climb another 35%

These shares have helped push the ASX 200 Index higher.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Boss Energy, Macquarie, Nova Minerals, and WiseTech shares are storming higher today

These shares are climbing more than most on Tuesday. What's going on?

Read more »

Green stock market graph with a rising arrow symbolising a rising share price.
Share Gainers

Guess which ASX mining stock is rocketing 80% today on huge Philippines news

This small-cap ASX mining stock is coming close to doubling its value today.

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Monash IVF, Pro Medicus, Telix, and Woodside shares are storming higher today

These shares are starting the week in a positive fashion. But why?

Read more »

Man in a business suit leaps off a boulder in front of a blue sky.
Share Gainers

3 ASX 200 stocks surging 13% to 36% in this shortened trading week

Investors sent these three ASX 200 stocks flying higher following the Easter break. But why?

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Share Gainers

Why Amaero, Mesoblast, Telix, and Tivan shares are charging higher today

These shares are ending the week on a high. But why?

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Energy Shares

Up 635% in one year, guess which ASX energy share is rocketing again on Friday

Investors are bidding up this surging ASX energy share again today. But why?

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Bendigo Bank, EBR Systems, Strickland, and Woodside shares are rising today

These shares are rising on Thursday. But why? Let's find out.

Read more »