BRIEFING.COM loves UIS:
Unisys (UIS) 11 1/2 -1/2: Unisys is another example of an
unloved tech stock that could come back into favor in the
weeks and months to come... We have noted several times
in recent weeks (primarily on the Tech Stocks page) that
investor interest has intensified in the beaten up stocks,
particularly in the software and Internet industries... In fact,
UIS had a big day yesterday - jumping nearly 10%... It's
backing up a bit today, but this is a stock that is down from
its 52-wk high by a jaw-dropping 77%... Declining revenues
(down 16% yoy in Q2) and disappointing earnings were
behind the plunge in the stock... While the company warned
that quarter three wouldn't be much better, management
noted that it expects to see a pick up in business by Q4 as
it closes on orders that were delayed... In case, you haven't
noticed Labor Day is almost here, as is Q4... In other words,
Briefing.com contends that the Q3 troubles are already in
the price... Any pick up in business, real or perceived, will
be enough to entice bargain hunters back into the stock as
UIS is a well-managed company with solid financials... It
was the perception of improved business conditions at IBM
(IBM) that triggered yesterday's spike in other mainframe
related companies like UIS and BMC Software (BMCS)...
UIS derives about 40% of its revenues from the sale of
mainframe servers and related software... Any pick up in the
mainframe business will bolster margins and help the bottom
line... With 7 of the 11 analysts providing ratings and
estimates to Zack's, rating the stock HOLD/NEUTRAL,
Briefing.com contends that the potential for positive
surprises is significant... And with the stock so depressed it
won't take many upgrades to ratings/earnings estimates to
get UIS's stock back on track... Let's face it, investors don't
often get a chance to buy stock in a company with nearly $7
bln in sales at a P/S ratio of less than 0.50 and forward P/Es
of 10x and 7.9x... Overhead supply and the potential for
tax-related selling suggest that the road to recovery will be
filled with potholes (especially short-term)... Nevertheless,
for the patient investor seeking better than market capital
appreciation, the favorable risk/reward ratio suggests that
UIS is a prime target... First resistance is in the 13 1/2-15
area, with penetration setting up a run to the 23-24 area. --
Robert Walberg, Briefing.com |
