Goldman Sachs Comments On Camelot Information Systems Earnings Beat

Camelot Information Systems CIS reported 3Q10 revenue, non-GAAP GPM, OPM, and EPS (ADS) of US$53.5mn, 37.2%, 21.9%, and US$0.23, above Goldman's estimates of US$47.4mn, 34.0%, 22.3%, and US$0.21, respectively, due to strong demand for both EAS and FIS. Camelot guided toward 2010E revenue and adj. EPS (ADS) of US$186mn and US$0.74, respectively, above our previous estimates/Reuters consensus of US$180.2mn/ US$177.3mn and US$0.72/US$0.69, respectively. Goldman views Camelot's 3Q10 results as incrementally positive. It slightly increases 2010E-2012E revenue by 3%-6% which drives our non-GAAP EPS estimates 2%-6% higher. Goldman maintains a Neutral rating on the stock and raises the 12m target price to US$17.80 from US$14.40, based on 20X NTM P/E. Upside risk: Better- than-expected demand in China. Downside risk: customer concentration and a shortage of IT experts. CIS closed Thursday at $17.72