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Stifel out with a note on American Science & Engineering (NASDAQ:ASEI), saying that details of the FY07 Supplemental Budget Appropriation bill include $24 million to upgrade 67 Z Backscatter Vans [ZBV] now in the field in Southwest Asia to ruggedized level, which means removing the proprietary equipment and installing it in a vehicle armored sufficiently to protect the crew and the equipment.

Firm views this potential order as a positive as it is the first indication that the ruggedized ZBV, for which development began just a few months ago, is ready for deployment, and also hints that future purchases of new ZBVs could be the ruggedized version, which most likely carries a higher price and delivers more operating profit dollars to American Science & Engineering's P&L.

Firm believes American Science & Engineering will likely partner with a reputable armored vehicle manufacturer and limit its direct work to high margin proprietary items.

ASEI shares trade with a high level of volatility and firm thinks current valuation levels are inexpensive given the proven utility of the company's products and likelihood of deployment of several new products over the next 12 months. The lack of forward visibility is what they think is behind the discount to the peer group, but they are confident that additional business will likely develop. Firm would be buyers at current levels.

Reiterates Buy and $72 price tgt.

Notablecalls: Nice find by Stifel! Expect to see buying interest based on this note. ASEI is a mover with sizeable short interest, so could be worth a point or more. Actionable!

Source: American Science & Engineering May Jump On Stifel Note