SAIC initiated with a Neutral at UBS

UBS analyst Gavin Parsons initiated coverage of SAIC (SAIC) with a Neutral rating and $134 price target as the firm initiates coverage on on Government IT & Services stocks. Government austerity is not the firm’s base-case scenario in the current environment of elevated global geopolitical tension and rapid technological advancement, and the 20% de-rating in stocks since the election may ultimately prove overdone, but UBS sees more headline risk than re- rate potential over the next year and as a result, believes it is too early to broadly buy the selloff, the analyst tells investors in a research note. With a likely choppier government environment, UBS recommends waiting for further progress on bookings and margins.