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Hugely significant $1.8m contract win

Kromek is pioneering digital colour imaging for x- and gamma rays, using cadmium zinc telluride crystals. Key markets include medical imaging, homeland security and nuclear detection.
Encouragingly, this morning the US Defense Threat Reduction Agency (DTRA: part of the Dept of Defense) have awarded a 2 year $1.8m contract to Kromek to develop a new military-grade ‘Radionuclide Identification Device’. Or, in other words, the firm has been tasked with creating a much ‘tougher & ruggedized’ version of its state-of-the-art D3S – so that it can operate under harsher terrains and combat conditions.
Although this certainly won’t be easy considering the levels of sophisticated gadgetry fitted inside each of these handheld detectors. Albeit we believe it is also comfortably within the scope of Kromek’s existing R&D and production capabilities.
It’s impossible to be too specific on the potential scale of this work at this stage. However, ultimately we reckon the magnitude of any follow-on commercial orders could be in the 10s of thousands – and importantly, too, at a higher price point than the civilian version of D3S. Hence our enthusiasm.
We make no change to our forecasts or 40p/share valuation, but recognise the potential upside and benefits to the group’s backlog and revenue visibility. This could have far wider connotations since, given the significance of NATO (re procurement), then eventually the D3S could even become the de facto standard for governments and armed forces worldwide to protect themselves against dirty bombs.