Recommendation: Buy KEYW Holding Corporation

1
Recommendation Buy KEYW Holding Corporation

• Green and Gold fund

2
Investment Thesis

• KEYW Holding Corporation is in a position to
  capitalize on the growing market of cyber
  security
• Most of the revenue of KEYW comes from cyber
  security.
• Their competitors have only a fractional amount
  of total production in cyber security(Example
  SAI).

3
Investment Key Points

• High Growth of Cyber Security Attacks in the
  Commercial and Government Sectors
• Increased Spending on Cyber Security by the U.S.
  Government
• Acquisitions
• Project G

4
Overview of KEYW

• Founded in 2008
• Provides Cyber Security and Geospatial
  Intelligence Solutions to Government agencies (
  Defense, Intelligence, and National Security) and
  Commercial Clients.
• In 2012, Revenue was split up into Services(71)
  and Integrated Solutions(29)
• The leadership is well experienced in cyber
  security (Leonard Moodispaw(CEO) has over 12
  years experience in the cyber security arena.
• Over 70 of employees have high level security
  clearances
• Their employees have one many security awards
  including Security Global Excellence Award(2013)

5
Management
Leonard Moodispaw President and CEO since inception Former President of Essex Corporation Former Vice President of Northrop Grumman Kim Dechello Chief Administrative officer since 2008 Former Chief Administrative officer of Essex Company
Ed Jaehne Chief Strategy Officer Formerly in the Leadership of Essex and Northrop Grumman companies Mark Willard Chief Impact Officer Former Chief Financial Officer of Horne International
John Crobath Chief Financial Officer since 2009 Former Director of Financial Operations of Kratos Defense Security Solutions Inc
6
Growth of Cyber Security Attacks
7
Increased Spending by U.S Government

• KEYW currently has 492 million dollars in backlog
  projects with the U.S government
• According to Market Research Media The Cyber
  security cumulative market is valued at 65.5
  billion (2013 2018), the U.S. Federal
  Cybersecurity market will grow steadily at
  about 6.2 CAGR(compound annual growth rate) over
  the next six years.

8
Acquisitions

• Since 2008 KEYW has acquired 14 companies. Most
  recently in (2012) (Poole and Associates) and
  Sensage which were bought out for 160 million
  dollars
• Sensage is a security analytics and data
  warehousing company. It has helped KEYW in its
  Project G efforts in cyber security
• When they buy companies they do not buy them at
  auction
• Part of the growth of KEYW is in its acquisitions
  
• Some of the recent companies that KEYW has
  acquired are Rsignia(cyber security company),
  Poole and Associates (mission-centric provider of
  systems and software engineering services to the
  U.S. Intelligence Community)

9
KEYW Project G

• Project G is a development of cyber security
  systems for the commercial sector.
• It offers 24 hour automatic protection against
  cyber attacks.
• The launch date is in the 2nd quarter of 2013
• They started testing the system in mid 2012
• (ATT is one of the companies that started
  testing the new system in July 2012)
• The names of the companies that are on the
  system will be released towards the end of 2013.
• The projected growth in revenue from Project G is
  30 of projected total revenue in 2015.

10
Revenue Growth
11
EPS Growth
12
Free Cash Flow (in millions)
13
The KEYW Holding Corporation
1y Target Est 17.71
Beta 1.58
Next Earnings Date 29-Apr-13
52wk Range 7.88 - 16.45
Avg Vol (3m) 330,298
Market Cap 527.02M
P/E (ttm) 492.33
EPS (ttm) 0.03
Div Yield N/A (N/A)







14
Current Price Chart
15
KEYW Comparison to SAI

• 
  
  
• SAI produces revenue from four areas. ¼ of its
  revenue comes from cyber security.

16
SWOT Analysis
Strengths High level relationship with U.S government Experienced Leadership Agile in response to cyber security attacks Small company, a lot of room for growth Opportunities Growth in Cyber Security Attacks Project G New Acquisitions
Weaknesses Most of the revenue comes from government contracts Threats Possible cuts in Government spending Increased Competition by other Security companies
17
Possible Strategies

• Sector IT/Telecom
• Industry Group Cyber Security
• Buy 300 shares of KEYW between
• 13.25 13.75, 3975 4125
• 0.7 of Total Portfolio