Morgan Stanley Opens 15-Day Research Tactical Idea on Computer Sciences Corporation

Morgan Stanley has opened a research tactical idea on Computer Sciences Corporation

believing that the share price will fall over the next 15 days. In the report, Morgan Stanley writes, "CSC's price has bounced off recent lows and is up 16% YTD vs. S&P +7%. However, heading into its F3Q12 results on 2/8, we see the potential for several headwinds: 1) Our channel checks indicate that demand for new IT infrastructure outsourcing (ITO) is weakening, and we therefore see downside risk to CSC's prior target for $4 Bn in F3Q bookings (+17.5% YOY on a TTM basis). IBM saw its outsourcing signings fall 15% YOY in constant currency in the December quarter, and third-party contract advisory firms also indicated that demand is decelerating. 2) CSC recently pulled its prior F12 guidance due to an impending charge of up to $1.5 Bn that it will take in relation to its NHS contract. We believe any new guidance issued in F3Q will be very conservative given an ongoing search for a new CEO." Morgan Stanley maintains its Equal-weight rating on Computer Sciences, which is currently trading down $0.93 from Friday's $28.07 closing price.