Bernstein Upgrades Electronic Data to Outperform

Analyst Rod Bourgeois sees earnings upside in the second half of the year for the info-tech services company

Bernstein upgraded Electronic Data Systems (EDS ) to outperform from market perform.

Analyst Rod Bourgeois says he thinks the major risks for the stock are understood, and he thinks financial results and the newsflow over the next six months are likely to be viewed more positively. He sees upside in the second half, with contract signings as catalysts.

Bourgeois expects improved earnings from the information-technology service provider's core business in the second half showing that turnaround efforts are progressing. While he's still concerned about EDS' junk-credit status, he thinks upcoming data related to long-term concerns, such as earnings derived from General Motors, its biggest client, will be inconclusive. The company's contract with GM is set to expire in June, 2006. This creates a trading opportunity for investors who are willing to accept long-term risks. Bourgeois sees 23 cents 2004 earnings per share, and 80 cents 2005 earnings per share.

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