FLIR Systems (FLIR) Seen Benefiting as Amazon, Others May Be Widely Deploying Thermal Cameras

William Blair analyst Louie DiPalma highlighted FLIR Systems, Inc. (NASDAQ: FLIR) following reports from Reuters over the weekend that Amazon (NASDAQ: AMZN) has begun to deploy thermal cameras at its warehouses and Whole Foods locations to screen workers for elevated temperatures. While the Reuters report suggested that Amazon may be using a thermal camera vendor other than FLIR for some warehouses, they expect FLIR to benefit from what may become a major trend.

DiPalma highlighted a multitude of reports of high-profile companies such as Wynn Resorts (NASDAQ: WYNN) and Emirates Airlines screening customers. They have received an inbound from an NBA team doing due diligence.

The analyst notes FLIR is the global leader in thermal uncooled cameras, which compose the largest portion of the thermal camera market by volume. Other competitors include Fortive's (NYSE: FTV) Fluke, Thermoteknix, and Infrared Cameras, Inc., the vendor referenced in the Reuters story.

While in February, the CEO said sales from COVID-19 were "not a needle mover," with companies like Amazon now planning to use thermal cameras to screen employees on a daily basis, and other companies intending to screen customers, DiPalma said, "we now believe that temperature screening sales may be a material contributor to FLIR's $1.8 billion in annual sales."

"In our view, it is now likely that thermal cameras will be more commonly used as a screening device for large gatherings (commercial airline flights, factories, sporting events, music performances, Broadway shows, and academic institutions)," DiPalma commented. "We contend that COVID-19 will have a net neutral impact on FLIR revenue as FLIR's cyclical sales in its Industrials Business Unit to manufacturing, chemical, and construction verticals will be negatively correlated with fever screener sales. Accordingly, we are not changing our estimates as we think that FLIR can achieve the very low end of its revenue outlook that we are currently modeling."

The analyst reiterated an Outperform rating on FLIR.

For an analyst ratings summary and ratings history on FLIR Systems, Inc. click here. For more ratings news on FLIR Systems, Inc. click here.

Shares of FLIR Systems, Inc. closed at $36.50 yesterday.

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