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Unisys (UIS) Remains Well Poised for Solid Organic Growth


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On Sep 26, Zacks Investment Research updated the research report on information technology firm Unisys Corporation (UIS - Analyst Report) .

The information technology industry is presently in a transition phase, forging new disruptive trends in cloud mobility, Big Data, social computing and increasing awareness of cyber security. In order to capitalize on the trends, Unisys is rationalizing its services and solution portfolio by shifting its offerings to cloud-based and software-as-a-service delivery models. The company is concentrating on business opportunities in fewer, more profitable sectors in the IT marketplace.

Unisys recently secured a three-year contract from public utility company Empresa de Servicios Públicos de Heredia (ESPH) in Costa Rica to provide endpoint management support to 320 branches, over 2,800 types of computer equipment, 500 corporate servers and more than 400 network elements for ESPH. This is the first contract following the partnership of Unisys and ServiceNow in Latin America. The contract will enable Unisys reach out to ESPH’s high-end clients, which in turn will help enhance its foothold in the area.

In order to drive future growth, Unisys is focusing its resources and investments in four targeted, high-potential market areas, including security (IT security and physical security), data center transformation and outsourcing services, end-user outsourcing and support services, and applications modernization and outsourcing services. As it seeks to keep up with the evolution in the IT industry, the company’s services unit looks set to take advantage of growth prospects in higher-margin services. The company has also secured quite a few contracts in these segments that should propel top-line growth in the coming quarters.

Unisys has also been restructuring its business to improve profitability. This restructuring strategy includes selling non-core businesses and revamping its sales strategy, while investing in a few higher-growth areas such as outsourcing. We expect the company to continue with its cost-control initiatives and put greater effort towards sales growth, as it strives to overcome its operational weaknesses. Unisys is focusing more to build specialized industry skills and resources required to win industry-specific project opportunities.

The company is investing heavily on developing a team dedicated to pursuing growth opportunities for application-managed services both for existing and new clients. These application-based managed services capability will enable this Zacks Rank #2 (Buy) stock to more effectively pursue long-term outsourcing opportunities, as well as associated application modernization and implementation project work.

Some other favorably ranked stocks in the IT services industry include Acxiom Corporation (ACXM - Analyst Report) , Science Applications International Corporation (SAIC - Snapshot Report) and Xerox Corporation (XRX - Analyst Report) , each carrying the same Zacks Rank as Unisys. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Acxiom has a strong long-term earnings growth expectation of 15%. In addition, the stock has a stellar earnings history, beating earnings estimates in each of the trailing four quarters.

Science Applications International Corporation is another strong performer in the industry with a solid earnings history, beating earnings estimates in each of the trailing four quarters.

Xerox has a long-term earnings growth expectation of 10%. The stock also has a healthy positive earnings history, beating earnings estimates in three of the trailing four quarters.

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