Leading Information technology solutions company CSC Inc. (CSC) is in the headlines again with positive newsflow. The company has recently secured a place in the “Fortune’s” list of the “World’s Most Admired Companies” for 2010.

CSC earned this coveted title after surpassing many industry peers and secured the fifth position in the information technology category. This apart, CSC recently announced the launch of the Common Access Card (CAC) Enabled – Remote Access. By using this technology government employees can access government computer networks from non-government computers, from any location.

This technology will help employees to access their work from any location during an emergency, when they are unable to reach their designated office. This is a highly secure setup, which enables the smooth flow of data across various geographic locations. We believe this can be a very useful tool for government officials and can play a pivotal role in reducing the bottlenecks in government workflow.

Recently, the company secured a $2.9 billion information technology infrastructure management service agreement with Zurich Financial Services Group for a period of 10.5 years. Under the terms of the contract, Computer Sciences will centralize Zurich Financial’s data center and virtualize its server arrangement. The other major project is the extension of the agreement with UK ‘s Royal Mail Group for provision of cloud computing information technology (IT) services. We believe these projects will increase the company’s recurring revenues.

The company rolled out decent third quarter numbers and provided a positive outlook for fiscal year 2010. CSC booked new business and saw sequentially positive revenue growth across all business segments except the North America Public Sector. The company’s third quarter EPS of $1.35 exceeded the Zacks Consensus Estimate of $1.23.  For the upcoming March quarter the Zacks Consensus Estimate is $1.38, exactly same as the most recent consensus estimate, thereby restricting for the possibility of an upside.
Although the company is generating positive news flow at regular intervals, 14 analysts tracking the stock have reduced their estimates for the upcoming quarter in last 30 days, which resulted in a 10 cent decline in the March 2010 estimate.  This may be attributed to the intense competition that the company faces in the IT and cloud computing space from both big and small players such as Accenture (ACN) and HP (HPQ). This apart, the company’s high dependence on US government contracts needs to be diversified. We are cautiously optimistic about the company.
Read the full analyst report on “CSC”
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Read the full analyst report on “HPQ”
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