) to buy from market perform.
Analyst Karl Keirstead says the company set fourth quarter guidance at the low end of previous estimates but above Street estimates, and this represents the third consecutive quarter of in-line or better EPS after trouble earlier last year. Also, he says government outsourcing markets are healthy.
Keirstead says although he's concerned about slowing revenue and a potential loss of the outsourcing market to Electronic Data Systems and IBM Global Services, he thinks the stock is arguably near trough valuation. Shares are trading at 15 times the $2.94 calendar 2002 cash EPS estimate and 0.6 times the expected calendar 20002 revenue. He thinks the downside risk below $40 appears to be relatively low. Keirstead set a new $55 12-month target.