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Research: Rada IM-SHORAD

Rada has been a frustrating stock. The pullback in the stock is unwarranted from what I can see. Rada gets no respect. Even though Rada grew revenue 75% yoy in Q220, year to date order are up over 100%, revenue guidance increased to $70mm, announced another $10mm of orders recently, the stock has gone from $7.75 to under $6 over the last few months.

What can you do? Only buy more, which is what I have been doing.

This weekend I saw the article referenced below. The IM-SHORAD production deal looks like it is done. Rada has been delivering prototypes for testing over the past couple years – now production orders should be coming soon. Estimates are for at least $60mm of revenue from this next year (from Canaccord). Maybe the stock will get some respect.

Notes I’ve accumulated on IM-SHORAD below, including the article.

  • program is sold to through DRS relationship:

Leonardo DRS. DRS is a major player in the defense electronics market in North America, with a focus on tactical systems and radars. In 2017, we signed a cooperation agreement with DRS to market and sell our tactical radars in the North American market for counter-UAV, short-range air defense, and other solutions. DRS has acquired a few MHR radars and is actively promoting our radars as part of their system solutions. In 2018, DRS was selected by the US Army as the mission equipment package provider for the Army’s IM-SHORAD program, which includes our MHR radars as onboard search sensors

  • DRS is a prime on the product along with GD and Raytheon (from this article)
  • Rada delivers the radars, i believe 4 radars per set, 1 set per UAV
  • from July 2018: RADA Electronic Industries announced that its Multi-Mission Hemispheric Radar (MHR) will be integrated into the Leonardo DRS mission equipment package (MEP) solution for the U.S. Army?s Initial Maneuver-Short Range Air Defense (IM-SHORAD) capability
  • nine prototype systems will be the basis for a future production decision of more than 140 systems, beginning in 2020.
  • is a $60mm annual opportunity in 2021 and 2022 – Canaccord initiation report
  • From Q219 cc:

IM-SHORAD is the army program, the Marine Corp is named GBAD. The army program is not a typical program of record. It evolved as an urgent need to a very rapid program. And probably all of us, some of us have seen that in the U.S. — AUSA conference being depicted as from slide to prototype within less than a year. So I think everybody involved, including the U.S. Army, are very proud of this momentum. The program itself is a sizable program for us. It’s close to 150 vehicles. And if it goes as planned, then it is now — it was already published by the program executive officer that if it started testing, we do see revenue start towards end of 2020 or mainly, again, 2021. And again, the testing and validation typically takes quite a few months until everybody is settled.

  • from Q419 call:

IM-SHORAD is not yet in a deployable situation. However, let me describe a bit our understanding of the case here. Maybe you have followed and noted that the U.S. Military is actually closing down some forward operating bases and moving troops to centralized locations because they cannot protect and they don’t have enough means to sense and warn against the fires that they have been suffering from recently. So my understanding is that the US Army at least is using what they have already in the inventories. And this is typically the heavy equipment, the C-RAM heavy equipment.

  • from Q120 call:

We have delivered 7 sets, which is 28 radars, maybe 30 with some spares. We are delivering soon another set of 4. But these are prototype sets, and as we mentioned in the discussion, we expect to get the several production orders later this year.

  • in presentation estimate it at 600+ radars when all is said and done – maybe more, not sure but Rada references 3x to 5x potential at one point, not sure if that is referring to potential vs. the 600 known radars

Green light From article:

  • US Army just announced green light Oct/4/20:
  • The US Army announced last week that it has given the green light for initial production of an Interim Maneuver Short-Range Air Defense (IM-SHORAD) system
  • article titled: “Huge contract for Israel’s RADA: US Army procuring dozens of IM-SHORAD vehicles”
  • awarded to GD – Rada partner
  • $1.2b contract
  • deal will run through Sept 2025
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