Giga-tronics (GIGA) Stock Nearly Triples on Licensing Agreement

Giga-tronics, Incorporated (NASDAQ: GIGA)

Giga-tronics is having an incredible day in the market after announcing that it has entered into a licensing agreement with one of the leaders in the defense sector, Lockheed Martin Corp. (NYSE: LMT). The licensing agreement surrounds software designed by GIGA that LMT plans on using in its new products. Today, we’ll talk about the details of the licensing agreement, what we’ve seen in the market from GIGA as a result and what we can expect to see from the stock moving forward.

Giga-tronics Enters Into An Agreement With Lockheed Martin

Earlier this morning Giga-tronics and Lockheed Martin announced that they had entered into a new, strategic software licensing agreement. The agreement surrounds Gig-tronics’ newest software, a real-time threat emulation system. Under the agreement, Lockheed Martin will have the ability to use the new software in conjunction with its hardware. It plans on adding the software to its new Advanced Signal Generator Hardware Platform. In a statement, Mark Elo, Vice President of Marketing at Giga-tronics had the following to say with regard to the agreement…

This is a win for the Electronic Warfare community, Locheed Martin and Giga-tronics. The treat generation software is built by a team that has a strong legacy of program support and brings many new capabilities in a commercial off the shelf solution that is both ready as a turnkey bench solution or a scalable alternative for larger projects.

Following the statement, John Regazzi, president and CEO of Giga-tronics had the following to say…

Lockheed Martin was one of the initial Advanced Signal Generator customers, this partnership demonstrates their belief in its potential and capabilities.”

How The Market Reacted To The News

As investors, we’ve come to expect that anytime there is good news released with regard to a publicly traded company, we can expect to see positive activity in the stock. That’s exactly what we’re seeing from GIGA today. Currently (11:13), the stock is trading at $3.01 per share after a gain of 171.17% so far today.

What We Can Expect To See Moving Forward

One of the first things that investors should keep in mind when we see instances of massive single day growth is the fact that price movement in the market tends to happen through a series of overreactions. With that said, the news today justifies growth from GIGA, but does it justify growth in the amount of 171.17%? Chances are that the answer is no.

What we’re seeing today is a bit of an overreaction. As a result, we can expect to see a slight correction on the value of the stock tomorrow that brings GIGA down to a more sustainable rate. At the bottom of this correction, we will find a perfect time to buy. From there, we should start to see the value of the stock level off and move toward steady growth. With that said, I have an incredibly bullish opinion of what we can expect to see from GIGA, both in the short term and the long term outlooks.

What Do You Think?

Where do you think GIGA is headed and why? Let us know your opinion in the comments below!