Morgan Stanley Equalweight On Computer Sciences

Morgan Stanley is out with a research report on Computer Sciences Corporation CSC and it has an Equal-Weight rating on shares. In a note to clients, Morgan Stanley writes, "Today's announcement that CSC has reached an agreement in principle with the US government over its longstanding contract claims is neutral to marginally positive for the stock, in our view. Neutral because this is a mostly historical issue that is unlikely to have a significant valuation impact, and marginally positive in the sense that: 1) it clears up one issue in a fairly complex story; 2) the associated $1B contract extension should benefit bookings in a challenging selling environment (while helping to de-risk CSC's F2Q and F12 bookings guidance of $6.0B and ~$17B, respectively); and 3) the $277mm lump sum upfront cash payment by the government will likely drive CSC's FCF well above 100% of net income for F12." Shares of CSC gained 32 cents yesterday to close at $29.34.