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What You Lost by Overlooking Computer Sciences Stock
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Shares of Computer Sciences Corporation have been gaining solid momentum since last month. One of the major reasons behind this is could be Hewlett Packard Enterprise Company’s (HPE - Free Report) decision to spin off its Enterprise Services business and merge the same with Computer Sciences.
The deal will combine Computer Sciences’ strength in insurance, healthcare and financial services with Hewlett Packard Enterprise’s expertise in industries like transportation, pharma, technology, media and telecom. Post the merger, the combined entity will become the world’s second-largest IT services company after Accenture plc (ACN - Free Report) and generate revenues of approximately $26 billion.
Since the announcement of the merger proposition on May 24, Computer Sciences’ shares have soared over 41%. Year to date, the stock has gained approximately 55%.
The combined company is expected to generate cost synergies worth $1 billion during the first year and record a run rate of $1.5 billion at the end of the same. Per the deal, shareholders of each of the companies will own about 50% of the combined company.
Over the past few years, Computer Sciences has been focused on cloud computing and the Big Data business to cash in on the growing demand. Companies are increasingly relying on cloud-based services to make IT systems more agile and productive, and save costs considerably.
The merger with Hewlett Packard Enterprise’s business will thus strengthen Computer Sciences’ capabilities, allowing it to become a leading player in the IT services domain.
Share price appreciation can also be attributed to better-than-expected results for the fourth quarter of fiscal 2016. Quarterly results were announced on May 24 as well.
Going forward, the company’s strategic acquisitions are likely to strengthen its portfolio and drive growth. Some of the most important acquisitions made by Computer Sciences include UCX Limited, Autonomic Resources, Fruition Partners and Fixnetix.
However, the company is likely to face challenges with regard to the integration of the new businesses and costs associated with the same. Apart from this, increased competition and delay in the government’s order renewal process and constricted federal spending may pose headwinds.
Currently, Computer Sciences has a Zacks Rank #3 (Hold). A better-ranked technology stock is Ebix Inc. , carrying a Zacks Rank #2 (Buy).
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What You Lost by Overlooking Computer Sciences Stock
Shares of Computer Sciences Corporation have been gaining solid momentum since last month. One of the major reasons behind this is could be Hewlett Packard Enterprise Company’s (HPE - Free Report) decision to spin off its Enterprise Services business and merge the same with Computer Sciences.
The deal will combine Computer Sciences’ strength in insurance, healthcare and financial services with Hewlett Packard Enterprise’s expertise in industries like transportation, pharma, technology, media and telecom. Post the merger, the combined entity will become the world’s second-largest IT services company after Accenture plc (ACN - Free Report) and generate revenues of approximately $26 billion.
Since the announcement of the merger proposition on May 24, Computer Sciences’ shares have soared over 41%. Year to date, the stock has gained approximately 55%.
COMP SCIENCE Price
COMP SCIENCE Price | COMP SCIENCE Quote
The combined company is expected to generate cost synergies worth $1 billion during the first year and record a run rate of $1.5 billion at the end of the same. Per the deal, shareholders of each of the companies will own about 50% of the combined company.
Over the past few years, Computer Sciences has been focused on cloud computing and the Big Data business to cash in on the growing demand. Companies are increasingly relying on cloud-based services to make IT systems more agile and productive, and save costs considerably.
The merger with Hewlett Packard Enterprise’s business will thus strengthen Computer Sciences’ capabilities, allowing it to become a leading player in the IT services domain.
Share price appreciation can also be attributed to better-than-expected results for the fourth quarter of fiscal 2016. Quarterly results were announced on May 24 as well.
Going forward, the company’s strategic acquisitions are likely to strengthen its portfolio and drive growth. Some of the most important acquisitions made by Computer Sciences include UCX Limited, Autonomic Resources, Fruition Partners and Fixnetix.
However, the company is likely to face challenges with regard to the integration of the new businesses and costs associated with the same. Apart from this, increased competition and delay in the government’s order renewal process and constricted federal spending may pose headwinds.
Currently, Computer Sciences has a Zacks Rank #3 (Hold). A better-ranked technology stock is Ebix Inc. , carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>