NEW YORK (TheStreet) -- Shares of Computer Sciences (CSC) are soaring by 33.88% to $47.73 on heavy trading volume on Wednesday morning, as the Tysons Corner, VA-based global IT provider announces its merger with Hewlett Packard Enterprise (HPE).
The company's merger with Hewlett's IT services businesses is expected to produce cost synergies of about $1 billion in the first year, Reuters reports.
Additionally, Hewlett Packard says it predicts to gain $33 billion in annual revenue from the spinoff.
As a result, Barclays upgraded the stock to "overweight" from "equal weight" and raised its price target to $54 from $35.
"We suspect that shares of Computer Sciences will trade up today as the accretion from the merger to CSC, combined with expected and potential future synergies, more than outweigh concerns around overall short- and long-term top-line growth. We anticipate that the focus on Computer Sciences and the newly combined entity with Hewlett Packard will shift back to a cost takeout story," Barclays analysts said in an investor note this morning.
About 1.44 million of the company's shares are changing hands this morning versus its average 30-day volume of 1.12 million shares per day.
Separately, TheStreet Ratings rated Computer Sciences as a "buy" with a score of B-.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon.
Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
This is driven by multiple strengths, which TheStreet Ratings believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks that are covered.
The company's strengths can be seen in multiple areas, such as its compelling growth in net income, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and notable return on equity.
TheStreet Ratings feels its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
You can view the full analysis from the report here: CSC