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SAIC Wins $727M IT Modernization Deal From the U.S. Air Force

Zacks Equity Research

Science Applications International Corp. SAIC recently received a $727-million Common Computing Environment (Cloud One) contract by the U.S. Air Force. Per the application modernization contract, the company will aid the transformation of about 800 Air Force and U.S. Army mission applications to the cloud.

The contract comprises firm fixed price, labor hour and cost-reimbursement aspects with a nine-month performance period. Science Applications will also aid the transformation of Army applications as part of the contract.

The company’s expertise and capabilities in cloud, IT modernization, software, cyber and data analytics are prompting the constant flow of contracts.

Science Applications International Corporation Price and Consensus

Science Applications International Corporation Price and Consensus

Science Applications International Corporation price-consensus-chart | Science Applications International Corporation Quote

SAIC Rides on Contract Wins

Science Applications is benefiting from the continuous flow of high-value contracts. Record level of awards reflects its disciplined business development actions, consistent operational excellence and high customer satisfaction. Notably, as of Dec 5, 2019, the company’s total backlog was $14.5 billion.

Furthermore, having the government as a big client lends stability to the business and moderates fluctuation in revenues. Although the government generally has a lengthy approval process, the projects earn money for several years, after approval.

In November last year, Science Applications received contracts worth $582 million from space and intelligence community customers.

Moreover, in September 2019, it secured an eight-year prime contract worth $85 million to provide advanced IT support and maintenance services for the city of Anaheim, CA’s infrastructure, applications and workplace solutions.

Prospects Bright Amid Competition

Competition from CACI International CACI in the IT services space remains steady. CACI continues to win high-value contracts and recently secured a $438-million five-year award task order to develop and support the Air Force Research Laboratory’s Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) programs and other technologies.

In the IT services industry, Science Applications also competes with IBM IBM and Accenture ACN, which are among the top IT service providers in the world.

Nonetheless, back-to-back contract wins are the key catalysts driving the business perennially for Science Applications. Per Statista, the global IT Services market is expected to reach $748 billion this year. This forecast bodes well for Science Applications, which is a key supplier in this space.

Science Applications currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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