In a report released yesterday, Bryan Bergin from TD Cowen reiterated a Hold rating on DXC Technology (DXC – Research Report), with a price target of $23.00.
Geoff Meacham has given his Hold rating due to a combination of factors affecting DXC Technology’s recent performance and future outlook. Despite the mixed results in the third quarter and a lower-than-expected revenue and EPS guidance for the fourth quarter, DXC has managed to avoid the dire scenarios anticipated by the market following their surprise CEO change. The newly confirmed CEO, Raul Fernandez, has not indicated any significant strategic shifts but has emphasized the importance of execution, particularly in sales, solutioning, and service delivery, considering the existing large enterprise client base.
Meacham’s assessment also takes into account the company’s consistent reiteration of its focus on free cash flow (FCF) and its commitment to share repurchases, which should provide a buffer against potential stock price declines. However, the lowered forecasts for FY24, alongside the expected contraction in the fourth quarter, suggest a more gradual path to top-line stability rather than a swift recovery. This cautious outlook, combined with ongoing efforts to optimize sources of FCF and manage expectations more effectively, underpins the Hold rating and the set price target of $23.
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DXC Technology (DXC) Company Description:
DXC Technology Co. provides technology consulting, outsourcing and support services. It operates through the following segments: Global Business Services (GBS) and Global Infrastructure Services (GIS). The GBS segment provides technology solutions that help clients address challenges and accelerates the digital transformations that is tailored to each client’s specific objectives. The GIS segment offers to deliver predictable outcomes and measurable results, while reducing business risk and operational costs for clients. The USPS segment delivers IT services and business solutions to all levels of government in the United States. The company was founded on 19th May, 2016 and is headquartered in Tysons, VA.
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