DLJ defends CSC after Lehman downgraded yesterday stock dropped 13%. Upgrades to Buy from Market Perform, target price $65. Belives is poised to benefit from IT services, increasing demand after Y2K. Lehman cited Y2K lockdown, not being well-positioned in e-business and network serivces; DLJ says Y2K fears will go away after end of year; thinks is well-positioned.
Lately, when a company posts earnings within expectations, that is considered not good enough, and the stock sells off on the news. Since this is most likely the case, this time for CSC's earnings, we can expect CSC to dip even if it meets or slightly exceeds its forcast.
Often right before CSC is sold off, it goes up for no good reason. That is what happened a couple of weeks ago. Historically, when insiders knew bad news was coming, they drove the price up, and then shorted the stock. The reverse happens when good news is coming.
It will be interesting to see if CSC goes down, right before its earnings come out, it might mean that CSC's earnings are better then forcast.
Last year, CSC reported 45 cents on October 26. Most analyst predict that CSC will report 55 cents. In recent years, since Honeycutt has been President, the company has given the analyst fair assesments of CSC's earnings, and CSC has always come in within one cent ot those estimates. I would expect this to be the case again. 54 cents would represent 20% growth, which is what CSC seems to have grown in recent years. Since there is the internet/e-commerce business in addition to CSC's continuing outsourcing business, you should expect CSC to grow at more than 20% in future years. For CSC to grow at 20% a year is like falling off a log.