NEW YORK (AP) -- Shares of Computer Task Group rose Tuesday after an analyst upgraded the shares, which are trading at their lowest prices in a year.
THE SPARK: Analyst Kevin Liu of B. Riley & Co. upgraded the stock to "Buy" from "Neutral." The IT solutions and staffing company's shares have tumbled more than 34 percent since July, when it reported disappointing quarterly revenue and cut its annual guidance. Liu maintained a price target of $19.75 per share.
THE BIG PICTURE: Computer Task Group Inc. provides IT solutions for companies in health care, financial services, energy and technology services. It also offers electronic medical record services to hospitals, physician groups, and health care exchanges, and IT staffing services for major technology companies and large corporations.
The Buffalo, N.Y., company reported its second-quarter results on July 22. Computer Task Group posted $107.1 million in revenue, which was about $5 million less than analysts expected, and it lowered its guidance for the full year. The company said some of its clients were cutting back on IT project spending and some of its electronic medical records projects were being delayed. At the same time, one of its large staffing clients needed fewer technical resources.
Computer Task Group now expects to report net income of 93 cents to 96 cents per share, on $428 million to $436 million in revenue. It had forecast net income of $1.02 to $1.12 per share and $450 million to $460 million in revenue.
Analysts are currently projecting net income of 96 cents per share and $432.7 million in revenue, according to FactSet.
THE ANALYSIS: Liu said the lower stock price reflects the difficulties Computer Task Group is facing in its solutions and staffing businesses, but he said investors are overlooking its medical model and fraud, waste and abuse solutions. He said those products could boost the company's earnings.
SHARE ACTION: Shares of Computer Task Group gained $1.69, or 10.5 percent, to $17.85 in morning trading. The stock reached an annual low of $15.51 Monday, and traded as high as $26.11 several days before its second-quarter report.