Virginia-based Computer Sciences Corp. (CSC) announced that it has renewed a seven-year information technology (IT) outsourcing deal with Denmark’s leading insurance company, Tryg, for a total value of $348.0 million.
Tryg sells insurance products in Denmark through its own distribution channels, while its subsidiaries market these in Sweden, Finland and Norway. Its products cover roughly one million beneficiaries. Tryg is expanding its operations through acquisitions in Finland and Sweden.
Under the contract, which was originally signed in 2007, Computer Sciences will extend its services to Tryg’s newly acquired operating units. Services like CSC Dynamic Desktop and cloud technologies will reduce IT costs and make Tryg’s business development and transition more flexible.
Computer Sciences shares a strong business relationship with Tryg. Previously, Computer Sciences services have helped Tryg to reduce its IT-infrastructure cost and focus more on managing businesses. The benefits reaped from the tech-solution provider’s services led the Nordic region-based insurer to renew the business deal, which will run through December 2017.
In February, Computer Sciences renewed a 5-year IT outsourcing contract with Italy-based defense electronics company SELEX Galileo. The refreshed contract is valued at $200.0 million. Per the contract, Computer Sciences will extend its full range of IT services in support of SELEX Galileo’s IT eco-system. Moreover, in the same month Computer Sciences won a 5-year IT contract from the Australian Department of Defence.
We remain encouraged by Computer Sciences’ steady flow of deal wins, as they indicate the efficacy and popularity of its products. We are also encouraged by Computer Sciences’ third quarter results but remain apprehensive regarding its high debt burden. Intense competition in the IT and cloud computing space from both big and small players such as Accenture plc (ACN) and Hewlett-Packard Co (HPQ) are added concerns. Contract delays and foreign exchange headwinds could also have a temporary negative impact.
Currently, Computer Sciences has a Zacks Rank of #4, implying a short-term Sell recommendation.
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