Perot Systems Corporation (NYSE: PER) offers information technology, business process outsourcing and strategic consulting services through its operations in the US, Mexico, Europe and India. Offerings include applications development, systems integration, claims processing, call center operations, enterprise analysis and research. The company serves clients in banking, insurance, healthcare, manufacturing, telecommunications, travel, energy and defense. Electronic Data Systems (NYSE: EDS) and IBM (NYSE: IBM) are major competitors.

The firm pleased investors earlier in the month, when it reported Q4 EPS of 35 cents and revenues of $732 million. Analysts had been looking for 30 cents and $707.9 million. The CEO attributed the solid results to new business, globally-delivered projects and existing client expansion. Management also guided Q1 EPS to 21-23 cents (21 cent consensus) and Q1 revenues to $665-$680 million ($673.52M consensus).

MOST NOTEWORTHY: Thornburg Mortgage, Expedia and Perot Systems were today's noteworthy upgrades:

• Jefferies upgraded shares of Thornburg Mortgage Inc Corp (NYSE: TMA) to Buy from Hold as they believe the stock is at an inflection point, characterized by accelerated earnings and dividend growth.
• Expedia Inc (NASDAQ: EXPE) was upgraded to Outperform from Neutral at Credit Suisse, as they believe the company is well-positioned to benefit from global e-travel and media opportunities, strong free cash flow, and attractive valuation.
• Perot Systems Corporation (NYSE: PER) was upgraded to Sector Perform from Underperform at RBC Capital following its Q4 report.

OTHER UPGRADES:

• HSBC raised Swiss Reinsurance Company (OTC: SWCEY) to Overweight from Neutral.
• The Estee Lauder Companies Inc (NYSE: EL) was upgraded to Equal Weight from Underweight at Lehman.
• Cantor upgraded Genomic Health Inc (NASDAQ: GHDX) to Buy from Hold.

With the market being propelled upward due to private equity and corporate acquisitions, investors should not stay on the sidelines. Rather, they should target private equity's next frontier -- IT services. Of the companies in this sector, Unisys Corp. (NYSE: UIS), Perot Systems Corp. (NYSE: PER) and Ingram Micro, Inc. (NYSE: IM) may be worth examining.

A few months ago, I suggested several sectors and companies that private equity could target next. On Friday, TheStreet.com reiterated one of those sectors -- IT services. Here's how much seven such companies have gone up or down since my March 29th post along with their market capitalizations ranked by their Price/Earnings to Earnings Growth (PEG) ratios:

Brent Bracelin, an analyst with Pacific Crest Securities, is warming up to Dell Inc. (NASDAQ: DELL). He notched his rating from "Sector perform" to "outperform."

And with $12.5 billion in the bank, Dell might start shopping for buyout prey. Why? He thinks the company will want to expand aggressively into the services space -- which would certainly be an extension of its PC business.

Here are some of Bracelin's picks:

Computer Sciences (NYSE: CSC)
Perot Systems Corp. (NYSE: PER)
Unisys Corp. (NYSE: UIS)
TechTeam Global Inc. (NASDAQ: TEAM)

Bracelin thinks Dell might also look at companies with proprietary technology. An interesting target is actually Sun Microsystems (NASDAQ: SUNW).

Although, it's mostly a yawn for the Street. Dell's stock is up $0.25 to $23.76.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.