The NIH Chooses Unisys

Last week, Unisys Corporation (UIS - Analyst Report) received a contract from The National Institutes of Health (NIH) to compete with another 53 companies for task orders. This contract was awarded by The NIH under the Chief Information Officers-Solutions and Partners 3 (CIO-SP3) contract vehicle.

This indefinite delivery/indefinite quantity (IDIQ) contract awarded to the 54 companies including Unisys is expected to be worth $20 billion over a period of 10 years. The ten categories of task orders Unisys can compete for include federal health mission IT support services, federal CIO office IT support services, services for supporting collection etc.

The CIO-SP3 deal was not the first award offered by The NIH to Unisys. Its previous CIO-SP3 agreement expired recently. Hence, the present superseding CIO-SP3 contract avers that The NIH affirms a lot of faith and confidence in Unisys’ solutions through such long-term ventures.

Such continual contract wins have become a major growth driver for boosting sales incipiently for the company. On April 24, 2012, Unisys declared financial results of its first quarter in 2012, whereby total revenue surged almost 2% annually to reach $928.4 million. We believe that the company needs these major panegyrics in the form of contract wins and extensions in order to post even stronger results in its upcoming quarters.

Unisys should also keep a wary eye out for competitor advances in the industry. Big players in this regard include EPAM Systems, Inc. (EPAM - Snapshot Report), CoStar Group Inc. (CSGP - Snapshot Report) and Fair Issac Corp. (FICO - Snapshot Report).

The company currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. However, we presently maintain our ‘Neutral’ recommendation on the stock.