In the last six years, stock has soared Rada More than 1,400%, but in the past year it has actually yielded a negative return for investors. Since reaching its peak last February, it has lost close to 35% of its battle. The defense company now provides a positive outlook for continued growth in the coming years.
Rada, managed by Dov Sela, provides tactical radars designed for the maneuvering forces. The company is traded on the Nasdaq and Tel Aviv at a value of $ 464 million. At a virtual investor conference this week, it provided details on its long-term growth strategy. Rada has updated that in 2022 it expects revenue of $ 140 million – an increase of close to 20% over revenue of $ 117 million which it is expected to present in the 2021 reports, as it recently updated. The growth rate of revenue in 2021 was higher than expected in 2022 and amounts to about 54%.
The company updates that out of revenues in the current year, about $ 90 million will come from the US, with over 90% of them budget-backed and being in the defense budget items, some already in Rada’s backlog. According to Rada’s management, the forecast does not include immediate delivery orders Ultimately the actual revenue.
Expects annual revenues to double within 3-4 years
At the same time, Rada sets itself an annual revenue target of $ 250 million within three to four years (without setting an unequivocal deadline for achieving the target at this stage). This means more than doubling revenues relative to 2021.
The company expects revenue from Active Defense (APS), which is not included in the revenue forecast for 2022, to contribute significantly to its revenue from 2023, and that non-US revenue will reach US revenue by the end of 2024, compared to about a quarter of the company’s total revenue in 2021.
Beyond that, Rada notes that mergers and acquisitions “will become a significant part of Rada’s growth strategy in the near term.” At the end of the third quarter of 2021, Rada had $ 87 million in cash on hand that could also be used for mergers and acquisitions. As stated, the multi-year forecast is organic and does not include a contribution of acquisitions to revenue at this stage.
“Mergers and acquisitions will accelerate the company’s growth”
Dov Sela, CEO of Rada, said: “We have confirmed our target market size (TAM) estimated at about $ 6 billion over the next decade, with half of it, the APS market, expected to positively impact our revenues starting in 2023. So far, we have realized only a small part of the potential of our target markets. “
Sela added that the company is satisfied with the growth potential in 2022. According to him, the revenue forecast for this year has supporting factors: the SHORAD markets – short-term air defense systems and the Point-Defense (protection of facilities and bases) in the US are in the stabilization phase, he said.
Markets outside the U.S. will contribute about $ 40 million to Rada’s revenue in 2022, and avionics – Rada’s traditional area of activity from previous years – will add another $ 10 million to revenue this year.
“Looking to the future, we expect an acceleration in growth starting in 2023,” Sela said. “We are updating our strategic plan and include mergers and acquisitions activities aimed at accelerating the company’s growth in the medium term.”