SAN FRANCISCO, Jan. 11 /PRNewswire-FirstCall/ -- Merriman Curhan Ford (NASDAQ:MERR) today announced that it has initiated coverage on the Defense Electronics/Advanced Communications sector under equity research analyst James McIlree, CFA. (Logo: http://www.newscom.com/cgi-bin/prnh/20090911/MCFLOGO) McIlree's research thesis includes company coverage of Comtech Telecomm (NASDAQ:CMTL), Force Protection (NASDAQ:FRPT), GeoEye (NASDAQ:GEOY) and Harris Corp. (NYSE:HRS) with Buy ratings, and Applied Signal (NASDAQ:APSG), DigitalGlobe (NYSE:DGI), Globecomm (NASDAQ:GCOM) and Ultralife (NASDAQ: ULBI) with Neutral ratings. McIlree highlighted these themes in his company initiation reports: -- Comtech Telecomm (NASDAQ:CMTL) ($37.00) (Buy) -- We are initiating coverage of Comtech Telecomm with a Buy rating and believe a potential valuation range of $45-50 per share based on an EV/EBITDA multiple of 5.5-6.5x is achievable. As the year progresses we expect clarity on the BFT (Blue Force Tracking) and MTS (Movement Tracking System) contracts to move the multiple. We also believe a strengthening economy will lead to better than expected satcom modem results, and excellent cost controls to propel estimates higher. -- Force Protection (NASDAQ:FRPT) ($5.35) (Buy) -- We are initiating coverage of Force Protection with a Buy rating and believe a potential valuation range of $7 - 8 per share based on an EV/EBITDA multiple 6.5-7.7x is achievable. We believe our estimates can be exceeded since we assume a drop in maintenance revenue per vehicle in 2010, but given the high operational tempo in Afghanistan, this could prove conservative. In addition, we have not built in potential international vehicle production wins, which could also drive estimates higher. -- GeoEye (NASDAQ:GEOY) ($28.49) (Buy) -- We are initiating coverage of GeoEye with a Buy rating and believe the shares have the potential to reach $35-40 per share. This is based on achieving an EV/EBITDA multiple of approximately 5-5.5x. While there is not as much upside to estimates relative to DigitalGlobe, there is upside. Even at 5x FTM EBITDA, we regard the shares as cheap given the limited competition, strong customer demand and favorable financial characteristics. -- Harris Corp. (NYSE:HRS) ($48.69) (Buy) -- We are initiating coverage of Harris Corp. with a Buy recommendation and believe a potential valuation of $60-65 per share is reasonable. This is based on the shares trading between a market multiple and a 10% premium. In the short-term we believe the driver for possible upside to estimates is the increased troop deployment to Afghanistan. In the long-term, we believe the exigent procurement of radios today could lead to a greater role in the Joint Tactical Radio System (JTRS) and greater long-term revenue and EPS visibility. -- Applied Signal (NASDAQ:APSG) ($19.14) (Neutral) -- At less than 7x FTM EBITDA, valuation for APSG is attractive, but a catalyst is lacking. The company's move into tactical SIGINT (products used to detect and locate 3G wireless signals) is taking longer than expected to develop and will be a drag on growth this fiscal year. The company's core broadband communications business is strong, but growing modestly. And while sensor systems are growing quickly, the base is small. Patient investors should take a look, since the company is in the right place at the right time and a potential takeover target. -- DigitalGlobe (NYSE:DGI) ($25.92) (Neutral) -- We believe revenue and EBITDA estimates for DigitalGlobe's FY10 remain too high. That and the valuation premium to GeoEye keep us on the sidelines. We estimate the company's recently launched WorldView-2 satellite, which achieved full operational capability this year, will become fully utilized in the 2011 time frame, driving a significant increase in financial results. For us, the take up of WorldView-2's capacity is a matter of when, not if. -- Globecomm (NASDAQ:GCOM) ($7.86) (Neutral) -- Globecomm has made an impressive transformation from a commodity supplier of satellite ground station equipment to a leading independent teleport operator and designer and manufacturer of military and commercial satellite ground station equipment. The shares are trading at 5.4x FTM EBITDA and, in our opinion, could probably trade up from here. However, given the lack of liquidity in the name we are looking for a bigger potential upside before recommending the shares. -- Ultralife (NASDAQ:ULBI) ($4.47) (Neutral) -- The short-term task for Ultralife is to convert the Satellite-on-the-move (SOTM) kits in inventory to cash and pay down short-term debt. This is an urgent and achievable task. Over the long-term, we believe the company needs to generate more consistent results in order to win back investor favor and improve its multiple. Members of the media can obtain a copy of these Merriman Curhan Ford research reports by e-mailing the Equity Research department at or by calling (646)292-1429. About Merriman Curhan Ford Merriman Curhan Ford (NASDAQ:MERR) (http://www.mcfco.com/AboutUs/IR.php) is a financial services firm focused on fast-growing companies and the institutions that invest in them. The company offers high-quality investment banking, equity research, institutional services and corporate & venture services, and specializes in five growth industry sectors: CleanTech, Consumer, Media & Internet, Health Care, Natural Resources and Technology. For more information, please go to http://www.mcfco.com/. Important Disclosures This research has been prepared by Merriman Curhan Ford & Co. ("MCF & Co."), a wholly owned subsidiary of Merriman Curhan Ford Group, Inc. Some companies MCF & Co. follows are emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in MCF & Co. research reports may be unsuitable for some investors depending on their specific investment objectives, financial status, risk profile, or particular needs. Investors should consider this report as only a single factor in making their investment decisions and should not rely solely on this report in evaluating whether or not to buy or sell the securities of the subject company. Regulation Analyst Certification ("Reg. AC") All of the views expressed in this research report accurately reflect the research analyst's personal views about any and all of the subject securities or issuers. No part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst in the subject company of this research report. Research analysts are not directly compensated for specific revenue generated by the firm's investment banking transactions/activities. General Disclosures MCF & Co. expects to receive or intends to seek compensation for investment banking services for all of the companies in its research universe in the next three months. 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Key to Investment Rankings (expected total share price return inclusive of dividend reinvestment, if applicable) Percent of companies under research coverage from which MCF & Co. received compensation for investment banking services provided in the previous 12 months or Percent expects to receive or of No. of intends to seek in the Rating Universe Stocks Description next three months ------ -------- ------ ----------- ------------------------ MCF & Co. expects the stock price to Buy 76% 87 appreciate 10% or 9% more over the next 12 months. Initiate or increase position. --- --- --- --------------------- --- MCF & Co believes the stock price is Neutral 22% 25 fairly valued at 0% current levels. Maintain position or take no action. ------- --- --- ------------------ --- MCF & Co. expects the stock price to Sell 2% 2 depreciate over the 0% next 12 months. Sell or decrease position. ---- --- --- ------------------- --- MCF & Co. archives and reviews outgoing and incoming email. 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Additional information supporting the statements in this report is available upon request. http://www.newscom.com/cgi-bin/prnh/20090911/MCFLOGO http://photoarchive.ap.org/ DATASOURCE: Merriman Curhan Ford CONTACT: Charles Mastellone, Supervisory Analyst of Merriman Curhan Ford, +1-646-292-1429, Web Site: http://www.mcfco.com/

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