Thomas Weisel Partners Rate Computer Sciences Corporation (NYSE: CSC) As Overweight Despite Possible Missed Milestone

Analysts at Thomas Weisel maintain their Overweight rating for Computer Sciences Corporation (NYSE: CSC) despite a report that the company may have missed a milestone regarding its Lorenzo patient administration system.

Analysts outlined the situation by stating that, “According to [a] press report published in the UK on Wednesday, CSC failed to install its first Lorenzo patient administration system at Morecambe Bay and thus failed to meet the March deadline for the NHS contract milestone. Specifically, the NHS was quoted as follows ‘In connection with the deployment of Lorenzo 1.9 at Morecambe Bay, we can confirm that there have been no payments in respect of delivery as the National Programme for IT does not make payment before delivery.’”

Commenting on the possible impact on earnings, analysts said, “While financial details are scarce, we estimate this contract is currently generating approximately $300-400mn in annualized revenue and $0.15-$0.25/yr (4%) in EPS.”

Going into further detail, they said, “More importantly though, is the potential impact on future earnings. Our FY11 EPS estimate of $5.25 (consensus is $5.21), assumes 4-5% cc revenue growth, 23bp of margin expansion to 7.9% and 32% tax rate. While the estimates above are crude, we believe it is unlikely the contract would be canceled outright and the contract is likely generating peak earnings, these estimates are our best guess of the potential exposure.”