Investing.com -- Kopin Corp (NASDAQ: KOPN) shares surged 22% in premarket trading, building on gains from the previous session. The spike follows a report by Breaking Defense that the U.S. Army has initiated a potential recompetition process for Microsoft (NASDAQ:MSFT)'s $22 billion Integrated Visual Augmentation System (IVAS) production contract, a development that could benefit the Massachusetts-based microdisplay company.
Kopin has expressed interest in the IVAS Next (LON:NXT) Program, capturing the attention of industry analysts and investors. Lake Street Capital Markets analyst Jaeson Schmidt maintained a Buy rating and a $2.50 price target on Kopin, citing the company's growing traction in the defense sector and sustained order momentum. "We think the IVAS news not only validates the Company’s capabilities and technology but also illustrates that CEO Murray and team are executing the strategy he implemented since joining," Schmidt commented.
The defense revenue of Kopin was up 109% YoY in the third quarter and 77% YoY year-to-date through the same period. The company's involvement in defense, including the F-35 program, weapons sight programs, and Lockheed missile program, positions it favorably in the eyes of the U.S. government, especially after Samsung (KS:005930)'s acquisition of eMagin (NYSE:EMAN) in 2023 left Kopin as the only U.S.-owned microdisplay company.
The Army's request for information (RFI) for the IVAS Next Program, which seeks to address issues such as visual discomfort and nausea from current mixed-reality headsets, has set a deadline of February 26 for companies to respond with their solutions. While Microsoft is expected to participate, Kopin's interest in the program has been publicly noted, alongside potential bids from other companies.
The current IVAS contract, centered around Microsoft's HoloLens 2, has faced challenges, including soldier complaints of discomfort and system reliability issues. The Army has since been exploring upgrades and alternative solutions, with the IVAS Next initiative signaling readiness for a new approach.
As the Army evaluates its options, Kopin's stock movement reflects investor optimism about the company's potential role in the future of military augmented reality technology.
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