Two Down and One to Go. DLHC has now won recompetes on two of its three key contracts. We expect DLH to retain the VA logistics award after the protest and we believe the logistics win puts the Company in the drivers seat for the pharmacy services contract. Nailing down these three contracts positions the Company to add incremental organic growth from the recent acquisitions and any future acquisitions, in our view.Expanded TAM. DLH's recent acquisitions, specifically S3 and IBA, have expanded the Company's Total Addressable Market, in our view. Management continues to see significant opportunities going forward and we believe the Company's increased size provides DLH with the breadth and depth to compete for an expanded menu of awards. We also believe the Company will be successful in competing for procurements, estimated to be in excess of $100 million of revenue, that have been pushed to right over the last two years.Benefits of Deleveraging. As noted in yesterday's note, DLH has reduced its net debt level to $62.3 million at quarter's end, resulting in a 2.44x leverage ratio. Due to the reduced leverage ratio, the interest rate dropped by 50 basis points on the remaining debt. With expected cash flow for the remainder of the year, debt should be reduced to the $50-$52 million level, although given the Company's history of rapid debt repayment, we would not be surprised to see it reduced further, especially if COVID impacted programs rebound stronger than anticipated.Updated Projections. Given the 2Q beat, we modestly increased our estimates for the remainder of fiscal 2021. We are now projecting third quarter revenue of $62 million, up from a prior $60.8 million, and raising our EPS estimate to $0.20 from a prior $0.18. For the full fiscal year, we are now at revenue of $244.4 million and EPS of $0.74, up from $237.7 million and $0.64 previously.Maintaining Outperform Rating. We are maintaining our Outperform rating and our twelve month price target of $14.00 per share. At our price target, DLHC shares would trade at 9.7x our fiscal 2021 adjusted EBITDA estimate and 1.0x our fiscal 2021 revenue estimate, still discounts to its peer group. Read More >>