This time it’s a transportation contract for the computing major Computer Sciences Corporation (CSC). The company recently announced that it has been awarded one of six prime contractors in the Traffic Management Infrastructure Systems program contract by the U.S. Government’s Transportation’s Department.
It is an indefinite delivery, indefinite quantity (IDIQ) contract, which has been awarded to the company during its fiscal 2012 third quarter, and has a performance period of five years with a consolidated contract value not exceeding $450 million.
As per the agreement, CSC will compete for task orders to develop research and test the Federal Aviation Administration’s NextGen applications and concepts for programs such as the Continuous Lower Energy, Emissions and Noise and the Commercial Aviation Alternative Fuels Initiative.
The company is consistently winning private and government orders, and has secured a contract from NHS, the National Health Service (NHS) department of the U.K., which may be expected to extend its relations with the government department.
The company is not only nurturing and enhancing its relationship with NHS, but also exploring other areas. For instance, the company has a relationship with NAVAIR UAS to enhance its business prospects with the U.S. Navy. The company has won yet another contract from them, which has been valued at $874 million, which will be spread over a period of 60 months.
CSC has won a series of deals over the past six months. The company reported modest third quarter 2012 results, with EPS exceeding our expectation. Although revenues declined on a year over year basis, the flow of new business improved substantially from the year-ago period.
Intense competition in the IT and cloud computing space from both small and big players such as Accenture plc (ACN) and Hewlett-Packard Company ( “>HPQ), its European exposure and strained federal budgets have prompted our bearish outlook on the stock.
Currently, CSC holds a Zacks #5 Rank (implying a short-term Strong Sell rating).
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