L-1 Identity Solutions Inc. (NYSE: ID)

L-1 Identity Solutions Inc. (ID) is a provider of technology, products, systems and solutions, and services that protect and secure personal identities and assets. L-1 operates in two business segments: the Identity Solutions segment and the Services segment. The Identity Solutions segment offers secure credentialing, biometrics and enterprise access solutions marketed to federal agencies, state and local government agencies, including law enforcement and departments of corrections, foreign governments and commercial entities, such as financial, casinos and health care institutions. The Services segment offers enrollment services to federal and state government agencies and commercial enterprises, and financial institutions. In March 2008, the Company acquired Bioscrypt Inc. In August 2008, the Company acquired the ID Systems business of Digimarc Corp., a United States-based business in the secure credentialing market.

The Company was founded in 1992 and is headquartered in Stamford, Connecticut.

Source: Reuters.com, SEC Filings.

Financial Summary

Based on a preliminary review of fourth-quarter 2009 results, the Company expects revenue for the quarter ended December 31, 2009, of approximately $160.0 million and Adjusted EBITDA of $23.0 million – $25.0 million. The decrease from previously announced expectations of revenue between $180.0 million – $190.0 million and Adjusted EBITDA of $30.0 million to $35.0 million is due primarily to the delay in the award of an enterprise license with an existing U.S. customer. Less than anticipated revenues on an enrollment services program also contributed to the lower sales number.

For the full-year ended December 31, 2009, revenue is expected to be approximately $650.0 million, down from the previously anticipated range of $670.0 million – $680.0 million. The Company expects Adjusted EBITDA to be between $95.0 million – $97.0 million versus $102.0 million – $107.0 million. The Company expects to end the year with $1.3 billion in backlog.

Preliminary expectations provided for the full year ending December 31, 2010, remain unchanged at revenue of between $750.0 million – $775.0 million and Adjusted EBITDA of approximately $110.0 million – $120.0 million.

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast among 7 polled investment analysts. Against the L-1 Identity Solutions Inc. company.

The 4 analysts offering 12-month price targets for ID have a median target of 8.00, with a high estimate of 9.00 and a low estimate of 8.00. The median estimate represents a 9.89% increase from the last price of 7.28.

Source: www.ft.com

Consensus Estimates Analysis

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=ID

Investment Highlights

ID last week announced that it will be the exclusive provider for the program formerly known as Registered Traveler as a result of Alclear LLC winning the competitive bid for Verified Identity Pass Inc. assets. The competitive bidding process was conducted through procedures approved by the U.S. Bankruptcy Court, Southern District of New York. In connection with Alclear’s purchase of VIP’s assets, ID is expected to receive a multi-year contract to serve as prime integrator for the program formerly known as Registered Traveler. In that role, ID is expected to be the exclusive provider for all of the program’s systems integration, enrollment services and verification needs once the program is re-started. In recognition of its prior investments and contributions to the program, ID will also receive an equity investment in Alclear.

ID in late January announced a contract valued at $9.9 million over three years for advanced live scan biometric capture systems to be used as part of the USCIS immigrant citizenship application process. The terms include a one-year base contract of $6.6 million with two consecutive one-year options of approximately $1.6 million for additional solutions and services that bring the total contract value to $9.9 million over three years. The systems included in the base contract will be fully deployed by the end of the first half of 2010 within all of the 134 U.S. Customs and Immigration Service Application Support Centers (ASCs) located throughout the U.S. and U.S. territories of Saipan, Guam, the Virgin Islands and Puerto Rico.

The procurement is being conducted under the Department of Homeland Security “First Source” IDIQ. ID was the original technology provider on this program and an incumbent on the new contract. NCS Technologies Inc. is the prime and acting as program manager. The new live scan systems from ID will provide advanced systems using enhanced technology that increases the productivity of digital capture and electronic submission of fingerprint images to the Federal Bureau of Investigation (FBI) and US-VISIT. The fingerprints are used to conduct criminal background checks prior to USCIS making a determination whether to grant immigration benefits to applicants. The new ID live scans leverage a user friendly Windows-based interface and capture both roll and slap prints. The systems will be available in three configurations: kiosk, desktop and portable units. The systems will be supported by a 24-hour call center and nationwide field service organization that is wholly owned and operated by ID as part of the Company’s existing customer support infrastructure.

Source: http://ir.l1id.com/releases.cfm

Technical Analysis

Source: http://stockcharts.com

ID is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

ID has been relatively stable recently. This is evidenced by the width of its Bollinger Bands, which are tighter than normal. Additionally, ID is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

ID’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9-day moving average or signal line. This suggests that positive momentum has begun to slow.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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