Shares of Red Cat (NASDAQ:RCAT) soared as high as 50% today after the company was on the receiving end of a positive development from the Department of Defense (DoD). Red Cat announced that the U.S. Army and the DoD’s Defense Innovation Unit (DIU) selected its subsidiary, Teal Drones, to “compete in the Short Range Reconnaissance Tranche 2 (SRR T2) Program of Record.” The SRR T2 program seeks to provide Army platoons with a portable sUAS that will bolster situational awareness. Here’s what investors of RCAT stock should know about the program selection.
Why Is RCAT Stock Up Today?
Among other applicants, Teal was chosen to produce a next-generation sUAS for the U.S. Army. The sUAS will be designed for “surveillance and reconnaissance (S&R) duties, with a focus on autonomous capability.”
“The rigorous technical requirements and program objectives of SRR T2 dramatically narrowed the field from over three dozen drone manufacturers to just a handful that were selected by the Army to move forward with the program,” said Teal CEO George Matus. “We believe this puts us among the most elite drone manufacturers in the world and, consequently, is a significant recognition of our capabilities.”
The U.S. Army notified Teal last September that it had advanced into the prototype phase of the SRR T2 program. Teal also received a $1.5 million prototype contract as part of the program. Ultimately, Teal’s goal is to create a sUAS that will meet or exceed the Army’s technical requirements. After that, Teal seeks to win the SRR T2 production contract.
Teal has a solid history and relationship with government entities. In addition, the company was selected for the SRR T1 program in 2020 and developed five drones. These five drones were subsequently named to the Blue sUAS list and received approval from federal regulators. The Blue sUAS list is “focused on integrating leading commercial technologies into the Government.”
What’s Next For Red Cat?
Red Cat has confirmed that it will report quarterly earnings this Thursday, March 17, after the market close. According to Yahoo Finance, analysts are expecting revenue of $5.94 million for the quarter. Furthermore, the analyst earnings per share (EPS) estimate lies at 1 cent. For the next quarter, analysts are expecting $9.76 million in revenue on top of an EPS of 2 cents.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.