Head Start Renewal. Yesterday, DLH announced it had been awarded a contract to continue providing national monitoring support services to the Administration for Children and Families' Office of Head Start. The OHS contract is one of DLH's Big 3 contracts, along with the two VA contracts. The renewal adds certainty to a major portion of DLH's revenue base going forward, in our view.Details. The contract includes a base period of eight months, with four one-year options, valued at $150 million including the option periods, and it continues DLH’s longstanding relationship with ACF. In 2019, support for Head Start generated $37.6 million of revenue for DLH.Longstanding Relationship. Since 1999, DLH's subsidiary Danya has supported HHS's Office of Head Start under its flagship prime contract for the monitoring and evaluation of grants made under the Head Start program. Through this new contract DLH brings enhanced fraud, waste, and abuse detection services, bolstered by its in-house FedRAMP Ready secure data analytics platform-as-a-service (PaaS) Infinibyte Cloud solution.Maintaining Outperform Rating and $11.00 Price Target.. We are maintaining our Outperform rating and our twelve month price target of $11.00 per share. At our price target, DLHC shares would trade at 8.8x our fiscal 2020 adjusted EBITDA estimate and 0.9x our fiscal 2020 revenue estimate, still significant discounts to its peer group.Read More >>