CA, Inc. (NASDAQ:CA) — This IT management software and services firm, which develops data management systems and cloud storage, has benefitted from restructuring efforts and cost cutting.
On Jan. 21, the company reported fiscal third-quarter profits that beat expectations despite revenue falling 3.3% year over year due to a decline in international sales. Adjusted earnings per share (EPS) of $0.64 came in well ahead of the consensus estimate of $0.56.
Following this report, S&P Capital IQ raised its earnings estimates for fiscal 2015, scheduled to be reported in mid-May. Its analysts now expect earnings of $2.48 per share, up $0.03 from previous estimates. They rate CA stock a “buy” with a price target of $37, citing the company’s strong balance sheet, stock buyback program and low price-to-earnings (P/E) ratio.
A series of deep “V” formations usually precede a major advance, and CA stock had formed three since last year. Shares broke from the first deep “V” in mid-October, running from a low of $25.25 to a high of $33.31 on Feb. 26.
On Wednesday, CA stock opened lower, falling as much as 3.6% intraday, but closed down just 0.3%. Initial support is at the Jan. 28 closing low of $29.89, and then the 200-day moving average at $29.50.
Buy CA stock at $30 or lower with a trading target of $35 for a gain of 17%. Long-term investors should hold shares for a target of $37 plus the 3.1% dividend yield, which would result in an annual return of more than 26%.
