Computer Sciences on a Roll - Analyst Blog

Technology major Computer Sciences Corporation (CSC) is swamped with new orders. Additionally, the company is rolling out new solutions to attract more clients. Recently, the company added the Advanced Collaboration Solutions of International Business Machine's Lotus to its existing portfolio of Business Collaboration Solutions. This combined solution provides cost benefits, and business value to its end customers and a new Collaboration as a Service (CaaS) offering. We believe this new offering from the company will help it garner new clients moving ahead.

Deal win is another area in which the company is making headway, leaving many of its competitors behind. Recently, CSC was awarded an 18-month contract by TechConnectWV to develop, launch and implement a biometrics and identity program. Computer Sciences did not disclose the financial details of the deal but, as per the terms of the agreement, its Identity Labs staff will work with TechConnectWV to advance West Virginia's identity management industry, thereby enabling job growth, intellectual property development and a sustainable business model.

This apart, the company has also won a contract from the Food and Drug Administration (FDA) to provide support services for the agency's scientific computing community. The task order has a one-year base period and two one-year renewal options. As per the deal, Computer Sciences will provide scientific computing services to meet the special requirements of the FDA. The company has not divulged any pecuniary details of the deal.

We remain encouraged by Computer Sciences' new solution offerings and deal wins as they indicate the efficacy of its products. We look forward to similar deals, going forward. We also remain optimistic about the company's earnings outlook for fiscal 2011, based on strong bookings trends, enhanced product portfolio, growing customer base and macroeconomic recovery.

However, delays in renewal of contracts from existing clients may slightly constrain revenue growth in fiscal 2011. Moreover, intense competition in the IT and cloud computing space from players such as Accenture plc (ACN) and Hewlett-Packard Company (HPQ) is also a reason for concern.

Currently, Computer Sciences has a short-term Hold recommendation, as indicated by the Zacks #3 Rank.

 
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