Author: David J. Koning CFA

Back to Market Analysis home Remain selective in IT Services, favoring CTSH/BPO providers, but would look to get more constructive around pullbacks in Neutral-rated stocks. CTSH is our best idea, given expectations for reaccelerating yoy revenue growth in Q4 (high historical correlation of growth acceleration and multiple expansion). Highlights from our recent trip to Oracle OpenWorld include: (1) stable/improving demand for systems integration, (2) limited near-term threat from the cloud, and (3) the continued shift toward offshore delivery for systems integration work, especially technical/development work. Back to Market Analysis home For more information, please contact: David J. Koning, CFA 414.298.7494

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Back to Market Analysis home  We expect a solid currency-driven EPS beat/raise (revenue likely about in line); view risk/reward as reasonably balanced. We expect a solid EPS beat/raise, as currency has moved nicely into the company’s favor since they reported Q1 results. Yet we believe that significant upside to the stock may be limited given (1) somewhat choppy industry trends; (2) currency benefits can be transitory (quickly can move the other way); (3) the NTM multiple is similar to that of faster-growth CTSH. Back to Market Analysis home For more information, please contact: David J. Koning, CFA 414.298.7494

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