Outperform - Price 53.86
by Cowen and Company

Xerox 's (XRX) offer to acquire ACS could create a global $10 billion business process outsourcing/document-management vendor generating double-digit adjusted EPS growth….ACS' implied valuation is materially below Perot Systems ' (PER), and based on [Monday's] closing price, underestimates ACS. We…highlight the company's strong franchise, high recurring revenue base and booking momentum combined with the possibility of accelerating organic growth in second-half fiscal-year '10. The combination will create a global leader in document and business process management, with a $22 billion run rate, a $17 billion recurring-revenue run rate and a $10 billion services run rate….At the original implied price ($63.11 a share), ACS' implied valuation seems very reasonable (especially vis-à-vis Perot's takeout bid by Dell), valued at 14 times calendar-year 2010 EPS, 6.8 times enterprise value/earnings before interest, taxes, depreciation and amortization, and 13.9 times EV/free cash flow. Market cap: $5.3 billion.

"Xerox (XRX) said it has signed a definitive agreement to acquire Affiliated Computer Services (ACS) in a cash and stock deal that values ACS shares at $63.11." Read more here.

Affiliated Computer Services (ACS) was upgraded to Buy rating from Hold at Jefferies. Price target upped to $63 from $50 and FY08 eps estimates lift to $3.17 from $3.12.

Goldman said it is upgrading Affiliated Computer Services (ACS) to Buy from Neutral based on confidence in near-term results and potential outperformance in weak macro backdrop. Believe business model is relatively insulated from modest cutbacks in state spending. Price target raised to $62 from $52.

Credit Suisse said it is upgrading Affiliated Computer Systems (ACS) to Outperform from Neutral. Cites recent channel checks showing a pick-up in bookings and pipeline. Maintained $55 target price.

An analyst upgraded the technology outsourcing company, citing a steep drop in the shares' value as a reason to buy.

Stifel Nicolaus & Co. analyst George Price upgraded Affiliated to "Buy" from "Hold" with a $51 price target. Shares have fallen 31.6 percent since April 23. The Standard and Poor's 500 index, by contrast, has fallen only 4.4 percent.

The upgrade was due in part to improved organic growth, operation leverage, and earnings and cash-flow potential, he said.

The company said last Monday its board endorsed a proposed $1 billion stock buyback and approved the repurchase of up to $200 million of its stock under the program, effective immediately.

The stock trades for 6x cash flow.

outsourcing is where it is

Downgraded by RBC Capital Mkts from Outperform to Sector Perform

Downgraded by AG Edwards from Buy to Hold

Downgraded by Jefferies & Co from Buy to Hold