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UPDATE: Cowen and Company Upgrades CACI International on Multiple Positive Factors

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Earnings Scheduled For August 20, 2014
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In a report published Tuesday, Cowen and Company analyst Cai von Rumohr upgraded the rating on CACI International (NYSE: CACI) from Market Perform to Outperform, and raised the price target from $80.00 to $90.00.

In the report, Cowen and Company noted, “We expect healthy FY15 EPS/CFPS ramp on (1) flattish standalone profits, (2) Six3 accretion, & (3) maturity of CACI's dilutive convert. We're upgrading CACI to Outperform (from Market Perform) for a $90 price target (prev. $80) given its hefty valuation discount to peers. We assume 5% FY14-15E revenue drops due to the tough defense services environment; but this could be conservative given CACI's decent backlog (84% of FY14 guide midpoint vs. 65% at 6-30) & an $8B bid pipeline (75% for takeaway bids). Also, EBIT margins recovered from FY11's 6.2% low to 7.4% in FY13 as rev mix shifted to direct labor (41.5% of COGS vs. FY11's low of 35.1%), which is 4-5x more profitable than other direct costs. We expect margins to hold given (1) ongoing mix shift to direct labor (2) cuts in indirect costs, & (3) favorable timing reversal on a fixed-price contract.”

CACI International closed on Monday at $71.94.

Posted-In: Cai von Rumohr Cowen and CompanyAnalyst Color Upgrades Analyst Ratings

 

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