Computer Sciences Corporation: Credit Suisse Raises Price Target on Margin Expansion

Credit Suisse maintained their “Neutral” rating on Computer Sciences Corporation (NYSE: CSC) and with positive longer term growth trajectory and improving market conditions, the firm raised their price target to $55 from $50 earlier.

The Firm said “For FY10, CSC expects 25-50bps margin expansion derived from improving operations and tighter cost controls. As 1H10 margins currently stand at 7.6%, below FY guidance of 8.5% to 8.8%, the company expects a stronger 2H.”

It also said “CSC hosted its Analyst day in NYC, where it outlined its segment growth strategy to become a 6-8% annual organic revenue grower, with margins at or above 10%, and FCF of at least 90% of net income by FY13. While these long term milestones suggest a path of recovery for CSC, we hold some reservations as it continues to face near term headwinds with cancelled contracts, slower booking ramps, and the large-scale Lorenzo roll-out.”

Computer Sciences Corporation (CSC) is engaged in the information technology (IT) and professional services industry. CSC offers an array of services to clients in the commercial and government markets. Its service offerings include IT and business process outsourcing, and IT and professional services.