Zacks_Analysts' Blog : CSC Takes Over Maricom Systems - Analyst Blog

Virginia-based Computer Sciences Corp. (CSC) announced that it has acquired privately held information technology provider Maricom Systems Inc. for an undisclosed amount.

The acquisition will enable Computer Sciences to advance in the federal government’s health care space. Baltimore-based Maricom Systems provides business intelligence and data management solutions that support mission-critical health information technology (IT) systems within the U.S. Department of Health and Human Services (HHS). Maricom’s human resources (roughly 200) will also come under the Computer Sciences umbrella.

Post integration, the new unit will be a part of Computer Sciences’ Health Services business, which provides IT services and solutions, systems integration and operations support to HHS Centers. Maricom’s capabilities will allow the tech major to specialize in the areas of health care informatics and data management, ultimately aiding HHS in implementing IT improvements in the Patient Protection and Affordable Care Act.

Computer Sciences’ foray into the health care space dates back to December 2010, when it acquired privately held information technology outsourcing company Image Solutions Inc., a recognized name in the field of electronic submissions of New Drug Applications.

The company’s flagship products like eCTDXPress and ISIPublisher help organizations to capture and manage e-records, thereby streamlining workflow and reducing costs. Leveraging its capabilities, Computer Sciences has already strengthened its footprint in the related industry.

Overall, we expect these synergies to attract new business from the health care industry, leading to revenue growth.

The company reported decent first quarter 2012 results on the back of new business wins. However, we are apprehensive about the intense competition in the IT and cloud computing space from both small and big players such as Accenture plc (ACN) and Hewlett-Packard Company (HPQ).

Moreover, with government orders expected to dry up to a certain extent due to spending cuts and the push-out of realizations related to the National Health Services contract to future quarters, things look difficult for the company. Demand for its products in Europe could also remain gloomy in the near term.

Currently, Computer Sciences has a Zacks #5 Rank, implying a short-term Strong Sell recommendation.