SAIC upgraded to Overweight from Equal Weight at Wells Fargo

Wells Fargo analyst Matthew Akers upgraded SAIC (SAIC) to Overweight from Equal Weight with a price target of $147, down from $157. The firm reduced price targets on federal IT names as it sees pressure on federal spending from here. However, the risk/rewards look attractive with 40%-50% upside in the status quo defense spending scenario, the analyst tells investors in a research note. Wells thinks it will be difficult to enact the level of cuts the government efficiency agency has targeted. Double-digit earnings growth from SAIC is likely as the company accelerates capital deployment “on a depressed share price and clean balance sheet,” contends Wells. In an upside case where bid and re-compete rates are “fixed,” the firm thinks the stock can surpass $200 on higher growth and a smaller discount to the group.