Over the last few years, Unisys Corp. (UIS) has been restructuring its business to improve profitability. This restructuring strategy includes slashing jobs to reduce costs, selling non-core businesses and revamping its sales strategy, while also focusing investments on a few higher-growth areas such as outsourcing.
Unisys is currently concentrating on business opportunities in fewer, more profitable markets in the information technology (IT) marketplace. Recently, a few agencies upgraded their rating on Unisys in the wake of reduced debt as well as an improved operating performance. Estimates have also gone up significantly of late.
Consequently, we have upgraded our recommendation to Outperform from Underperform. Accordingly, we set a target price of $29.00, derived by applying a P/E multiple of roughly 12.3x our 2011 EPS estimate of $2.36.
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