EDS Stock, at 52-Week High, Finds Believers on Wall St.

Electronic Data Systems Corp., the Plano, Tex., data processing giant, reached a 52-week high of $58 a share last week, signaling its return to Wall Street's good graces.

Recent plans to reduce costs by $1 billion during three years, reorganize along geographic lines, and form an electronic commerce unit are putting the company on the right track, said Patrick Burton, an analyst at Salomon Smith Barney.

EDS is setting its sights "on businesses that have higher revenue-growth opportunities," Mr. Burton said.

He recently initiated coverage of the stock with a "buy" rating, giving it a 52-week target price of $66 a share.

The stock closed Friday at $54.50 a share, up 4% for the week and 79% from its Oct. 8 low of $30.4375.

Though EDS has grown 12% annually since 1977, it has struggled in recent years. Industry consolidation and a poorly negotiated data processing contract with General Motors Corp., its former parent, ate into EDS' margins. From 1995 to 1997, the company essentially had no growth.

Michael Littell, president of EDS' U.S. banking operations, said the company is putting more heft into its network of "solutions centers," high- tech laboratories designed to gather and share knowledge.

The company has opened two bank solutions centers in Louisiana in the last two years. The centers will do systems integration work and act as test beds for new applications, Mr. Littell said.

With data processing so "commoditized," Mr. Littell said, the solutions centers are a revenue source.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER