Surveillance technology provider CACI International (CAI) has been a main recipient of U.S. Defense and Homeland Security contracts for the past several years. Zacks senior technology industry analyst is keeping his Buy rating on CAI shares going forward, as well:
'CAI posted Q1:FY08 financial results with strong revenue of $554 million versus $468 million in Q1:FY07 and our estimate of $505 million and EPS of $0.60 versus our estimate of $0.59. CACI delivered a robust quarter of contract awards and funded backlog, though organic growth (12.5%) was primarily driven by lower-margin subcontractor work. Growing subcontractor work and pass-throughs led to revenue upside (up 18% y/y) and lower margins (down 150 bps y/y).
'Additionally, a robust funded backlog points to healthy near-term visibility. While contract activity has been strong in the last few quarters, backlog to revenue conversion has been somewhat soft in view of the constrained funding environment.
'CAI raised its FY2008 revenue guidance from a range of $2.05 - $2.15 billion to a range of $2.25 - $2.35 billion while maintaining its FY2008 EPS range of $2.50 to $2.80. The company also lowered its FY2008 operating margin forecast from a range of 7.0% - 7.4% to 6.6% - 7.0% with the recently experienced pressures persisting.
'While we have adjusted our FY2008 revenue estimates accordingly, we maintain our Buy rating and target price of $55. Our target price implies a P/E multiple of 20.7x when applied to our 2008 EPS estimate, roughly equivalent to the median multiple for the industry.'
Read the full analyst report on CAI.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.