Morgan Stanley Opens 15-Day Research Tactical Idea on Computer Sciences Corporation
Morgan Stanley has opened a research tactical idea on Computer Sciences Corporation (NYSE: CSC) 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.
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