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.
For more information, please contact:
David J. Koning, CFA