Morgan Stanley Bullish on 2 Government Contractors

Two bullish recommendations and a bearish view from the analyst note

by Josh Selway

Published on Jun 3, 2019 at 2:47 PM
Updated on Jun 24, 2020 at 10:16 AM

Analysts at Morgan Stanley today began coverage on government services stocks with a balanced outlook. The firm sees steady growth in the U.S. defensive space, full valuations in the sector, and increased competition. Still, two names the firm gave bullish attention were Booz Allen Hamilton Holding Corporation (NYSE:BAH) and Science Applications International Corp (NYSE:SAIC).

For BAH, the analysts gave the stock an "overweight" designation and $70 price target, giving it some run from the current perch of $63.12. Coming into today, 70% of covering analysts recommended buying the shares, while call buying has been popular in recent days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The bullish bias makes sense given the equity's 40% year-to-date lead.

SAIC stock was also given an "overweight" rating and $96 price target, well above the current price of $77.15. Six of eight analysts in coverage have "strong buy" recommendations in place, and the average 12-month price target is up at $89.

Of course, it wasn't all bullish from Morgan Stanley, as IT services stock Perspecta Inc (NYSE:PRSP) was hit with an "underweight" rating and $20 price target. As such, the shares are trading down 1.6% at $21.36, extending the recent break below the 50-day moving average. Other bears are moving in, as well, with short interest popping 18% in the last two reporting periods.

 


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