SAIC Climbs on Calming Forecast
SAN FRANCISCO -- Shares of SAIC (SAI) rose Tuesday after the company reaffirmed its full-year financial targets, giving investors confidence that it's weathering recent problems.
The stock was recently trading up 61 cents, over 3%, to $19.29 after management told analysts that the engineering- and information-technology-services contractor was on track to earn 83 to 88 cents a share from continuing operations for the current fiscal year, in line with prior guidance.
Analysts, on average, were expecting SAIC to earn 87 cents a share, excluding one-time items.
SAIC also reiterated its earlier annual revenue forecast of $8.7 billion to $9 billion, in line with analyst expectations. That forecast represents growth of 5% to 8.5%.The company also expects cash flow from operations to reach at least $450 million, down from $704 million last year. SAIC's stock has taken several hits this year since it originally issued its fiscal-year financial targets in April. The company has grappled with high employee turnover, pressure on its profit margins and the expiration of the lock-up period preventing employees from selling shares they were granted during the October 2006 initial public offering. Employees hold the majority of SAIC's shares. One of the biggest blows came in May when Congress sharply cut the budget for a military contract that accounted for about 3% of the company's revenue. SAIC draws roughly 40% of its revenue from defense contracts.
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