How does the margin on this custom thermal imaging assembly compare to Kopin’s existing product mix?

Margin Comparison

The $9 million follow‑on contract for a custom thermal‑imaging eyepiece is a highly specialized, defense‑oriented build that typically commands a premium price and tighter cost controls than Kopin’s broader product portfolio, which includes consumer‑grade micro‑displays, training simulators and medical optics. Defense “make‑to‑spec” programs often yield gross margins in the high‑30 % to low‑40 % range, whereas Kopin’s mixed‑use line‑up historically averages mid‑20 % to low‑30 % gross margins because of higher volume‑driven pricing pressure and larger R&D amortization spreads. Consequently, the new assembly should lift the company’s overall margin profile relative to its existing mix, at least for the life of this contract.

Trading Implications

The contract upgrade signals a deepening foothold in the high‑margin defense segment, which can act as a catalyst for the stock. Expect a modest near‑term price bump as analysts re‑rate Kopin’s earnings outlook (incremental contribution of roughly $1‑1.5 m to EBITDA at an uplifted margin). A bullish trade could be to buy on a short‑term pull‑back and target the next resistance level (≈ $15‑$16, based on recent 20‑day EMA), while keeping a stop below the 50‑day SMA (~$13.20) to protect against a potential macro‑risk reversal. On the downside, monitor defense‑spending trends and any procurement delays from the prime contractor, which could temporarily erode the anticipated margin premium.