After getting named in Fortune Magazine’s ‘World’s Most Admired Companies’ list for 2010, CSC Inc. (CSC) is in the headlines for grabbing a contract from the Department of Defense (DoD), wherein CSC will provide information technology help desk services to the DoD Dependents Schools-Europe (DoDDS-E). 

As per the agreement, the contract has a base period of one year, which can be extended by another four years, bringing the total five year contract value to $27.0 million. CSC will be responsible for providing information technology services and support throughout Europe. 

This deal win marks the continuation of the trend of major deal wins in recent times. A few days back, the company won another mammoth deal worth $2.8 billion, with the Department of State (DoS) Bureau of Consular Affairs. As per the agreement, CSC will provide a range of visa-related business process support services, local stand-alone facilities, and oversight and management of visa-support services for U.S. embassies and consulates abroad. This contract was awarded for an initial period of 1 year, with an option of extension up to another 9 years. 

These deal wins are expected to strengthen the revenue base of the company in the coming quarters. We believe the company’s aggressive marketing, high quality of technology enabled solutions and greater customer satisfactions are doing wonders. 

The same strategic approach helped the company secure a $2.9 billion information technology infrastructure management service agreement with Zurich Financial Services Group some time back. We believe that with companies increasing their IT spending across the globe, CSC will win many more deals in the days to come. 

While there has been quite a bit of positive news in recent times, it appears that 1 analyst tracking the stock has reduced estimates for the upcoming quarter, while 2 analysts have reduced its estimate for fiscal 2010. 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 a bit of diversification, as government orders are subject to stringent regulatory issues leading to a delay in the renewal process. Overall we remain optimistic on the stock.
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