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DynCorp Surges to New High on Earnings Print
June 7, 2007

NEW YORK (AP) - Shares of DynCorp rocketed to an all-time high Thursday after the military and law enforcement services provider, flush with government contracts, surprised analysts by reporting a more than threefold increase in fiscal fourth-quarter profits.

Shares of DynCorp surged to a new 52-week high of $20.12, before sliding back to $20.02, up $3.17, or 18.8 percent, in afternoon trading.
The Falls Church, Va.-based company Wednesday evening reported that quarterly earnings jumped to $18.9 million, or 33 cents per share, from $5.8 million, or 18 cents per share a year earlier.

Analysts polled by Thomson Financial expected earnings of 28 cents per share.

DynCorp expects fiscal 2008 profit to more than double.

CIBC World Markets Corp. upgraded its rating of DynCorp from "Sector Performer" to "Sector Outperformer" on the news.

"We believe the risk/reward for the stock has turned favorable following reasonable guidance (reported after the close) coupled with near-term catalysts," in the form of two Army service contracts, analyst Myles Walton wrote in a note to investors.

DynCorp is in a dispute with L-3 Communications Holdings Inc. and government watchdogs over one of those contracts, a $4.65 billion five-year deal to provide translation services in Iraq and Afghanistan. DynCorp has the Army's backing in the disagreement, but the matter has yet to be resolved.

Goldman Sachs analyst Richard Safran wrote that DynCorp is unlikely to record any meaningful revenue from the translation services contract before the end of fiscal 2008. He maintained a "Neutral" outlook pending further information from the company this morning.

"While (DynCorp) has been steadily improving operating margins, we believe this quarter was abnormally high," he wrote.

DynCorp went public in May 2006. Before Thursday, it traded between $8.87 and $17.78.
 
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