SRA International shares fall as 3Q earns miss estimates

NEW YORK—Shares of SRA International Inc. plunged after the information technology consultant posted a fiscal third-quarter profit below Wall Street estimates and cut its full-year guidance.

The stock lost $3.44, or 12.7 percent, to $22.76.

Late Tuesday, the Fairfax, Va., company said its profit for the quarter ended March 31 rose 20 percent to $18 million, or 30 cents per share, from $15 million, or 26 cents per share, in the same quarter last year.

The company said its revenue grew 18 percent to $376 million from $317.6 million on a threefold increase in new contracts.

Analysts polled by Thomson Financial expected a profit of 31 cents per share, on average.

In addition, SRA said it expected earnings between 31 cents per share and 33 cents per share in its fourth quarter. It also cut its revenue outlook for the year ending June 30 to between $1.49 billion and $1.51 billion.

In February, SRA guided for revenue of $1.51 billion to $1.54 billion.

Jefferies analyst Joseph Vafi maintained his "Hold" rating on SRA and called its outlook "flat" in a note to investors Wednesday.

Vafi was upbeat on the increase in new contracts, but said the company is operating in a tight funding environment and sees little to drive the stock higher in the near term. He maintained his $29 price target.

In a separate note, Banc of America Securities analyst Gregory Wowkun was more optimistic and reiterated his "Buy" rating on SRA, saying its longer-term growth prospects are strong even if its quarterly results were lackluster.

The analyst said SRA's pending acquisition of Era Corp. will prove a net positive as it contributes to earnings and revenue in the coming year.

"We ... are willing to look past the quarter's revenue shortfall if it means improved profitability for the business," he said.

Shares of SRA have traded between $21.10 and $31.88 in the past 52 weeks.