Analyst Keith Bachman of BMO Capital maintained a Hold rating on DXC Technology (DXC – Research Report), with a price target of $17.50.
Keith Bachman has given his Hold rating due to a combination of factors concerning DXC Technology’s performance and future outlook. DXC Technology surpassed its quarterly revenue and margin forecasts, excluding free cash flow (FCF), which did not meet the implied guidance. The company’s organic growth continued to decline, with only the Insurance segment showing growth, while other key areas such as the Modern Workplace and ITO business faced challenges. Bachman acknowledges that while the headcount reductions may be a step toward right-sizing the business, there remain concerns regarding DXC’s capacity to pivot towards growth effectively.
Furthermore, Bachman’s assessment reflects skepticism about the impact of DXC’s ongoing restructuring efforts, given the announcement of a new restructuring plan that involves significant FCF charges. The historical pattern of restructures has not yet yielded substantial benefits in positioning the company for profitable growth. Consequently, Bachman takes a cautious “wait-and-see” approach, as DXC embarks on another round of changes with the potential for modest margin improvements in the future. This multi-year transformation, coupled with the need for other business investments, presents a scenario where immediate performance gains are uncertain, justifying the Hold rating.
Bachman covers the Technology sector, focusing on stocks such as Adobe, Salesforce, and SAP AG. According to TipRanks, Bachman has an average return of 11.5% and a 58.62% success rate on recommended stocks.
In another report released yesterday, RBC Capital also assigned a Hold rating to the stock with a $18.00 price target.
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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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