CSC Wins U.K Government Deal - Analyst Blog


Days after securing an $874 million contract from the US Department of Defense, technology major Computer Sciences Corporation ( CSC ) announced the signing of a non-binding Letter of Intent with the UK Department of Health ( NHS ), under which CSC will deliver healthcare solutions and services, primarily across the North, the Midlands and East of England, as a part of NHS' reform agenda.

The Letter of Intent reflects a new approach aimed at more localized initiatives, suggesting the shift to more devolved decision-making and budgetary control within the NHS. NHS will continue to comply with rigorous national standards and will improve connectivity and interoperability of health providers to enhance overall patient care in England.

The CSC solution enables an innovative and more localized approach to patient care, which would in turn facilitate better decision making and would also offer budgetary control within the NHS. As per the contract, CSC will continue with its Lorenzo implementations, thus increasing the number of implementations beyond 10 with options of making more implementations as demand increases.

Over the years, we have witnessed that there is no dearth of government orders for CSC. The company is playing to its strengths and government deals have always been its forte. CSC also has the potential to compete for land-based task orders.

This apart, CSC has a large project pipeline and continues to augment it at regular intervals. Previously, the company won a contract from the U.S. Navy, which further enhanced Computer Sciences ' very strong business relationship with the U.S. Government departments.

Although the company reported mediocre operating performance in the third quarter, the flow of new business improved substantially from the year-ago period.

Despite the intense competition in the IT and cloud computing space from both small and big players such as Accenture plc ( ACN ) and Hewlett-Packard Company ( HPQ ), the European exposure and strained federal budgets, we think that things are beginning to look bright given the string of new business wins.

The 'shares carry a Zacks #3 Rank (implying a short-term Hold rating).

ACCENTURE PLC ( ACN ): Free Stock Analysis Report
COMP SCIENCE ( CSC ): Free Stock Analysis Report

HEWLETT PACKARD ( HPQ ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ACN , CSC , HPQ , NHS

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