JP Morgan Sees Big Upside For This Buyout Target

In a recent report, analysts at JP Morgan gave their updated take on the outlook for Computer Sciences Corp CSC in light of a recent story by Bloomberg that the company has been in talks to sell its business to private equity firms. While rumors of a potential buyout have dated all the way back to 2005, analysts believe the company has never been in a better position as a buyout target than it is right now.
Sum of the parts valuation
In recent years, CSC has grown its commercial business to the point where analysts now believe the unit could draw M&A interest on its own. While analysts see potential for slight margin expansion as a consolidated entity, they see potential for a 26 percent increase in CSC’s market cap if the commercial business and the federal unit are valued as separate entities.