) to neutral from overweight.
Analyst Dirk Godsey says his downgrade reflects a less attractive valuation. He notes PEC, a provider of technology services to the government, has solidly outperformed the peer group over the past several months. He thinks anticipated opportunities from the Defense Department and Homeland Security spending in 2003 already are factored into the stock price. Godsey says with the stock trading at 40 times 90-cent 2003 earnings per share estimate, the risk/reward balance is more favorable at lower levels.
Longer-term, Godsey says PEC is well-positioned for sustained robust growth, as shown in his 35% to 40% three-to-five year growth rate projection.