FLY.V - Mispriced.


Flyht Aerospace Solution Ltd. (FLY.V) helps airlines improve safety and decrease operational costs through their innovative products. FLY.V streams data from an aircraft via satellite to the airline's flight operations center. We initiated coverage in February 2017 with subsequent notes on September 3, and November 17. Since then, the following release were issued:

Jan. 8 - Provides Fourth Quarter 2017 Update: $0.5M new sales to Canadian Customer for AFIRS (228) hardware kit. In addition to AZUR ($2.1M), the total is $2.7M in new sales for Q4 2017. Backlog for AFIRS: $27M.

Mar. 15 - Announces Management Changes. Derek Payne resigned from his position as Chief Financial Officer (CFO) effective March 16 to pursue other opportunities. Alana Forbes, CPA, CGA, named as his replacement, effective immediately. In January 2018, Steve Newell, was hired in the position of Vice President, Business Development.

After a series of insider purchases, FLY.V was able to momentarily recover from the the disappointing Q3 Earning results. Thereafter, the stock consolidated around $2.00 for about six weeks. However, the weak 4th quarter update had a negative impact leading to a few S1 test ($1.75).

You'll notice is that one item is missing. A CEO Letter to Shareholders:

Jan. 29 - Boeing ecoDemonstrator Program Update - August 10th 2017 release. Delivered AFIRS 228S system and kit to Boeing for installation on the FedEx B777 this month for installation in mid-February. Customer training on FLYHT systems in late February, and the flight test beginning in early March to be completed in late April. FLYHT and Boeing to present the data collected through trial to two different industry working groups.

It's worth noting that FLY.V was the only company selected for the program to demonstrate its technological capabilities in Avionics. To our initial dismay, this update had no impact on the stock price. Then we realized something. Why was this not a new release? Was this requested by Boeing?

When you take this out of the equation, the slow and steady negative drift in the stock price makes sense. By the time the management change was announced, the price open below S1 ($1.75) and ended the day below S2 ($1.66) culminating to a 52 week low of $1.51 today. Having three consecutive deceiving earnings and a CFO not lasting 6 months are not good catalysts.

While we believe the Venture tends to be efficient, we question if it has the full story on FLY.V. Back in November, we expected that the insider purchases were a signal that FLY.V would perform better in Q4. This turned out not to be accurate so what we say next might also be. However. we believe that the market is not pricing in the importance of the ecoDemonstrator's update and minimizing the fact that FLY.V has a $27M backlog.

Despite the recent trend, we're still bullish and long. Back in November, we considered FLY.V an opportunity, now we think it is mispriced.

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.


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