Ahead of the Bell: SAIC

SAIC shares rise in after-hours after strong 4th-qtr results, declaration of special dividend

Associated Press

NEW YORK (AP) -- Shares of Science Applications International Corp. rose in after-hours trading after the security and communications technology provider posted a better-than-expected fourth-quarter profit and announced a special dividend of $1 per share.

But the McLean, Va.-based company, known as SAIC, also projected lower-than-expected revenue and in-line profit for the fiscal year that started in February, saying that it expects U.S. government defense spending to be flat.

SAIC said it remains on schedule for its split into two companies later in the year. One company will focus on national security and other work, while the other will handle government services.

Jefferies analyst Jason Kupferberg backed his "Buy" rating and $14.50 price target for SAIC, calling the dividend a "positive surprise."

He attributed the better-than-expected quarterly results to gains at the company's healthcare, computer and intelligence businesses, but noted that its fourth-quarter bookings and guidance were soft as a result of federal budget pressures and sequestration.

"We believe SAIC is executing well in a tough end market, the planned split should generate revenue synergies and shares are cheap," Kupferberg wrote in a note to investors.

SAIC shares rose 54 cents, or 4 percent, to $13.36 in after-hours trading on Tuesday.

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