Electro Optic (ASX:EOS) share price surges again, up 50% in 7 days. Here's why

It's been an amazing week for Electro Optic Systems shareholders.

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This picture shows a satellite orbiting the Earth to represent the rising Electro Optic share price over the past week

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Key points

  • Electro Optic Systems shares rocket again today, after accelerating 22.4% yesterday
  • Several countries are increasing their defence spending due to the Ukraine invasion
  • The board has decided to undertake a strategic review to maximise shareholder value

What a week it has been for the Electro Optic Systems Hldgs Ltd (ASX: EOS) share price.

Just two weeks ago, the defence contractor's shares were trading at a multi-year low of $1.605. That was when the ASX as a whole was looking grim due to the turmoil between Russia and the West.

However, a quick rebound ensued, particularly for the Electro Optic share price, as a number of countries ramped up their defence spending.

Investors who were brave enough to pick up some shares a mere 7 trading days ago would be sitting on an incredible gain of 51% at the time of writing. The Electro Optic Systems share price is currently $2.50, up 6.2%. In earlier trading, it was up by 12.3% to an intraday high of $2.64.

Let's take a look at the company's announcement to the ASX today.

Electro Optic undertakes strategic review

According to its release, the Electro Optic board is undertaking a strategic review to maximise shareholder value.

Recently, management has been in discussions with key parties in relation to funding options for its wholly-owned United States subsidiary, SpaceLink. This relates to the manufacture and launch of a constellation of medium earth orbit satellites to create a 'communications superhighway for the space economy'.

In addition, Electro Optic Systems is assessing opportunities to accelerate growth in the defence and space divisions.

The board believes the company is currently undervalued given the attractive future prospects on offer.

US investment bank, Greenhill & Co. (NYSE: GHL) has been appointed as financial advisor to assist in the strategic review.

Electro Optic Systems says there is no certainty that the review will lead to any particular outcome or transaction. But it appears investors are positive about this latest initiative.

Electro Optic Systems share price snapshot

Adding impressive gains over the last week, the Electro Optic share price is up 4.6% year to date.

But the past 12 months have been a turbulent ride for shareholders, with the company's shares sinking 55%.

Electro Optic Systems commands a market capitalisation of $354.64 million. It has approximately 150.91 million shares on issue.

Motley Fool contributor Aaron Teboneras owns Electro Optic Systems Holdings Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia owns and has recommended Electro Optic Systems Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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