SAIC Posts Solid Quarter, but Lawsuit Looms

SAN DIEGO (TheStreet) --

SAIC(SAI Quote), the government contractor, posted another quarter of revenue and profit growth late Wednesday.

Analysts largely praised the report, in which SAIC reaffirmed earlier guidance that projects profit growth of 11% to 18% for the company's current fiscal year.

Investors, however, reacted with something of a shrug. The stock was off between 2% and 3% in morning trading Thursday before moving into positive territory, recently changing hands at $18.13, up a nickel from the previous close.

For the just-ended quarter, SAIC said its per-share earnings grew 13% from a year ago, beating analysts' expectations by a penny, and that its revenue expanded by 8% to $2.75 billion.

The company has announced a series of contract wins since the beginning of the year, from IT services for FEMA to integration and training services for the Marines as the corps ramps up a new program designed to counter the use of radio-controlled bombs by opposition forces and terrorist groups in Afghanistan.

During the third quarter, SAIC said it booked $2.3 billion worth of new contracts -- not a gangbusters showing, according to some analysts, but a strong enough pace for the company to feel confident about its growth projections.

Still, all the positive news aside, SAIC has a potential problem: a Justice Department suit that could cost the firm more than $350 million in penalties and, much more ominously, could cause the federal government to temporarily ban the firm from bidding on new contracts.