With earnings for the third quarter on deck, and the fourth quarter of 2016 almost underway, many of the top companies we follow on Wall Street are making some changes to the lists of their high conviction stock picks for clients. With the market bursting through to new all-time highs, it makes sense to examine the lists and make some changes as the rest of the year could have additional volatility as the political cycle could prove to be very volatile component.
In a recent research note, the analysts at Jefferies make a big move by adding a top technology company, Computer Sciences Corp. (NYSE: CSC), to the firm’s well-respected Franchise Picks list of stocks to Buy. The company is expected to complete a merger with Hewlett Packard Enterprise Co. (NYSE: HPE) next March.
CSC provides innovative next-generation technology services and solutions that leverage deep industry expertise, global scale, technology independence and an extensive partner community. The company serves leading commercial and international public sector organizations throughout the world.
The Jefferies team thinks the merger could be 102% accretive to the year one earnings per share for the newly combined company, and they had this to say in the research report:
As we approach the March 2017 close date, we expect the shares could rally, and see catalysts even sooner, including: Hewlett Packard Enterprise to file Form 10 post the October 31st fiscal year end and the Computer Sciences Analyst Day in early 2017. Stock trades at about 7.7x our new company earnings-per-share estimates, we believe there could be upside to our cost synergy estimates.
CSC shareholders are paid a 1.07% dividend. The Jefferies price target for the stock is $63, and the Wall Street consensus target is much lower at $52.30. The shares closed near that level on Friday at $51.57.
In addition, here are the three top-yielding stocks in the Franchise List portfolio: