Virginia-based Computer Sciences Corp. (CSC) announced that it received an engineering and test support services indefinite-delivery/indefinite-quantity (IDIQ) contract from the U.S. Missile Defense Agency (MDA), jointly with four other companies. The contract has a termination period of five years and is worth $1.6 billion in total.
Per the terms of the contract, Computer Sciences will provide engineering and test services to support Engineering and Test directorates of the Ballistic Missile Defense System (BMDS). The system is one of the U.S. MDA programs for defending ballistic missiles.
Computer Sciences’ proven engineering services will facilitate the U.S. MDA to generate enhanced support services for its BMDS. We remain encouraged with Computer Sciences’ continuous defense deal wins and believe that the company’s growing base of experience and knowledge in various defense related fields will attract more deals from the sector.
Moreover, we believe that Computer Sciences is enjoying solid business flow from the mainstream industry, despite the disappointing outsourcing industry. Sluggish IT outsourcing bookings and weak order renewal rates suggest a relatively slower growth for this segment in 2011.
On the flipside, we remain encouraged by Computer Sciences’ acquisition strategy, which has helped it to grow its portfolio and expand its customer base and geographical reach.
Despite these positives, intense competition in the IT and cloud computing space from players such as Accenture Inc. (ACN) and Hewlett-Packard Co. (HPQ) keeps us on the sidelines.
Considering the above situation, we currently have a short-term Hold recommendation on Computer Sciences, as indicated by the Zacks #3 Rank.
Per the terms of the contract, Computer Sciences will provide engineering and test services to support Engineering and Test directorates of the Ballistic Missile Defense System (BMDS). The system is one of the U.S. MDA programs for defending ballistic missiles.
Computer Sciences’ proven engineering services will facilitate the U.S. MDA to generate enhanced support services for its BMDS. We remain encouraged with Computer Sciences’ continuous defense deal wins and believe that the company’s growing base of experience and knowledge in various defense related fields will attract more deals from the sector.
Moreover, we believe that Computer Sciences is enjoying solid business flow from the mainstream industry, despite the disappointing outsourcing industry. Sluggish IT outsourcing bookings and weak order renewal rates suggest a relatively slower growth for this segment in 2011.
On the flipside, we remain encouraged by Computer Sciences’ acquisition strategy, which has helped it to grow its portfolio and expand its customer base and geographical reach.
Despite these positives, intense competition in the IT and cloud computing space from players such as Accenture Inc. (ACN) and Hewlett-Packard Co. (HPQ) keeps us on the sidelines.
Considering the above situation, we currently have a short-term Hold recommendation on Computer Sciences, as indicated by the Zacks #3 Rank.
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