Organic Growth Returns. DLH reported an estimated $2.8 million of organic growth in the quarter. Organic growth has faced headwinds from the absence of pass thru travel revenue due to COVID (which still hasn't fully returned) and an expected reduction in scope of a HHS contract as the prior contract contained funds for an IT upgrade, which DLH successfully completed. We estimate this headwind at about $7 million annually over the five year contract term.VA Logistics. While we are disappointed the protest of the award continues to drag on, we are hopeful it will be resolved soon. We continue to believe DLH is well positioned to retain the contract given the quality and cost effectiveness DLH brings to the contract.Favorable Budgeting. The Federal budget environment is very favorable for the Agencies DLH targets, in our opinion. The $52 billion proposed for the National Institutes of Health represents a $9 billion increase. The Department of Veterans Affairs is expected to see its budget rise by nearly 10%. The House Appropriations Committee approved a $36.7 billion budget for medical and health care programs of the DoD, above the $35.6 billion requested. Updated Projections. We are maintaining our revenue estimates for the fourth quarter while increasing our EPS estimate by a penny. We are projecting fourth quarter revenue of $63 million, up from $50.7 million last year, and raising our EPS estimate to $0.22 from a prior $0.21, and last year's $0.15. For the full fiscal year, we are now at revenue of $243.9 million and EPS of $0.75.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 8.7x our fiscal 2021 adjusted EBITDA estimate and 0.9x our fiscal 2021 revenue estimate, still discounts to its peer group. Read More >>