Why Veridian Hasn't Bombed

Although most defense stocks have tumbled of late, Veridian (VNX ) has been flying high, leaping from 16 a share in June to 24.25 on Oct. 30. This provider of information systems and services for the government--focusing on national security programs for intelligence, defense, and law-enforcement agencies--has snared some big contracts, the latest of which was a five-year $154 million U.S. Navy deal that is expected to add $15 million in profits in 2003.

"The win confirms Veridian's strong positioning in the market for IT services [in defense]," says Edward Caso of Wachovia Securities, who rates the stock a buy. Wachovia has done banking for Veridian. Andrew Addison, editor of The Institutional View, says international political considerations as well as increased homeland-security spending will create more demand for Veridian services.

In October, Veridian bought Signal Corp., also a security technology outfit, whose sales and earnings have been growing 20% a year because of its business with agencies such as the Federal Aviation Administration and the Justice Dept. Consensus earnings estimates for Veridian are 80 cents to 85 cents a share for 2002 and 95 cents to $1 for 2003. Addison's 12-month stock price target is 35 a share.

Corrections and Clarifications In ``Why Veridian hasn't bombed,'' (Inside Wall Street, Nov. 11), a $154 million contract won by Veridian will add $15 million to sales--not to profits--in 2003.

By Gene G. Marcial

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