Drexel's Estimates For Science Applications International Revised Higher

Drexel Hamilton analyst Michael French has increased his price target on Science Applications International Corp SAIC shares to $63 from $55. The brokerage retained a Buy rating. The move comes after the company reported first quarter results that were ahead of the estimations.

"We think the firm remains poised to benefit from a more stable spending environment, and customers that are increasingly able to select contract awardees on best value criteria. Thus, we are increasing estimates and raising our target price on SAIC shares to $63," the analyst wrote in a note.

The brokerage pointed out that the company posted total sales of $1.21 billion, adjusted EBITDA of $88 million, operating income of $66 million, and net income of $33mm or $0.71 per diluted share. This was ahead of the analyst's estimation of revenues of $1.12bn, adjusted EBITDA of $81 million, operating income of $62 million, and net income of $31mm or $0.66 per diluted share.

Drexel cited that bookings remained solid at the end of the first quarter with $1.3 billion of fresh awards granted generating a book to bill of one. Following the period, the company was also re-awarded the $485 million NASA East program contract after it successfully defended a protest.

The brokerage thinks management was aggressive in deploying cash to shareholders during the quarter, buying $30 million in stock and paying $14 million in dividends, as well as reducing debt by $15 million.

The stock traded 1.6 percent down on Wednesday.