CA Jumps After Goldman Sachs Upgrade

Goldman Sachs Upgrade Sends CA Shares Higher Ahead of Analyst Day
NEW YORK (Associated Press) - Shares of CA Inc. jumped Friday after Goldman Sachs upgraded the management software maker.

Analyst Sarah Friar upgraded CA to "Buy" from "Neutral." She added the stock to the Goldman Sachs "Americas Buy List," calling the company a "favorite turnaround for early 2008."

"We believe cash flow growth will begin to 're-synch' with the company's robust net income growth as we move into next year, driven by margin expansion, and drawing greater attention to this often overlooked name," Friar wrote in a note to clients.

She doesn't expect CA to give specific guidance for fiscal 2009, which starts for the company in April, at its analyst meeting on Dec. 17. But she said the meeting will likely be a positive catalyst for the stock, as she expects the company to give details on its plan for revenue growth in the "mid-high single digits, cash flow growth more in-line with net income growth and margin improvements closer to the 30 percent-plus range."

"This is the first analyst day for CA in years, and the first time CFO Nancy Cooper has been able to formally lay out some detail on vision and targets since she joined the company last year," Friar wrote.

The Islandia, N.Y.-based company, formerly known as Computer Associates, is emerging from an accounting scandal which sent former CEO Sanjay Kumar to prison for 12 years last year. In early November, the company posted a nearly threefold increase in its second-quarter profit.

Shares rose 91 cents, or 3.6 percent, to $26.38 Friday. The stock has traded between $22.46 and $28.46 in the past 52 weeks. Top of page