- The Washington Times - Monday, November 21, 2005

Mantech International Corp.’s stock prices have slipped three months in a row, but the company says it has enough government contracting work lined up to support double-digit rates of growth into 2006.

For the third quarter ending Sept. 30, the Fairfax defense contractor’s net income was $11.7 million, up 50 percent from $7.8 million in the year-ago period. The company reported an 18 percent growth in organic revenue, which excludes the impact of acquisitions and foreign currency fluctuations.

“We expect those trends to continue into the next year,” Mantech spokesman Mark Root said. The company estimates organic growth rates of 12 to 15 percent in the next quarter.

In the third quarter, the company — which has 6,000 employees in the United States and 38 other countries — reported a record $570 million in new contract awards, many of which involve customers who are not identified for national security reasons. Still, the share price, which closed at $26.07 yesterday, is more than $6 below the year high of $32.88 on Aug. 2.

“Last quarter, they were very strong, but they’ve really been anemic for the last year,” said Erik Olbeter, an analyst with Stanford Washington Research Group in the District, which does not own or do banking with Mantech.



“In my mind, there’s a question as to whether or not the firm has enough new business in the pipeline to generate the kind of earnings that analysts and Wall Street are expecting.”

Mr. Olbeter praised the company for expanding its consulting and professional-service offerings as a way of diversifying its core business.

“From a big picture standpoint, the thing that I think makes Mantech risky is they have a lot of exposure to the Iraq war because they’re almost 100 percent defense, and a significant portion of that is overseas,” he said.

“I think they have had a very nice run supporting intelligence operations and the military overseas, but that part of the industry is not going to grow as fast as some of the higher-end command and control systems back in the States.”

Joseph Vafi, an analyst with Jefferies & Co. in San Francisco, said the company’s stock price could be influenced by levels of government spending as well as high-level perceptions on Wall Street.

“If there were a significant pullout from Iraq, it is possible that Mantech could see some level of its business decrease,” said Mr. Vafi, whose company does not own shares but has done banking with Mantech. “But generally, companies like Mantech have shown very solid growth, and we wouldn’t really expect to see any dramatic slowdown in spending or growth in their sectors.”

Mr. Root agreed. “Unfortunately, the war on terror doesn’t look like it’s going to end anytime soon,” he said.

Both analysts said Mantech is a good buy for long-term investors. “Someone with a longer-term perspective who is willing to take risks in the short run should take a look at Mantech,” Mr. Olbeter said. “Right now on a relative valuation basis, this stock is cheaper than most others serving the same market.”

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