How are energy investors positioned?
On Wednesday, BMO Capital Markets adjusted its outlook on DXC Technology (NYSE: NYSE:DXC) by increasing the price target from $25.00 to $26.00. The firm retained its Market Perform rating on the company’s shares. The adjustment followed DXC Technology’s recent earnings report, which was noted for its solid performance. According to InvestingPro data, DXC has achieved a perfect Piotroski Score of 9, indicating strong financial health, while its stock has gained over 23% in the past six months. Analysts at BMO Capital highlighted that the quarter’s results were positively influenced by certain one-time items that particularly boosted profitability.
According to BMO Capital, DXC Technology is gradually progressing towards stabilizing its revenue and aiming to return to its pre-restructuring free cash flow (FCF) levels, which are around $750 million. InvestingPro analysis shows the company currently generates substantial free cash flow with a yield of 31%, making it one of the strongest in its peer group. However, the firm emphasized that achieving these goals would require a sustained effort over multiple years, rather than just within fiscal years 2025 or 2026.
The research firm pointed out that DXC Technology needs to focus on enhancing its sales, delivery, and productivity over the next one to two years to continue its trajectory towards improvement. This ongoing commitment to execution is deemed crucial for the company’s success.
BMO Capital’s new price target of $26 reflects the incremental progress DXC Technology is making, albeit acknowledging the time it will take for the company to fully realize its objectives. The Market Perform rating suggests that while analysts see potential in DXC Technology’s strategy and recent performance, they also advise caution, given the extended timeline required for the company’s transformation.
In other recent news, DXC Technology reported its third-quarter fiscal 2025 results, demonstrating a mixed performance. The company’s earnings exceeded expectations with an adjusted earnings per share of $0.92, beating the analyst estimate of $0.77. However, the IT services firm experienced a shortfall in its revenue, reporting $3.23 billion against the consensus estimate of $3.26 billion, marking a 5.1% decrease compared to the same quarter last year.
Despite the revenue miss, DXC Technology raised its full-year guidance, now expecting fiscal 2025 adjusted earnings per share of approximately $3.35, an increase from its previous forecast of $3.00 to $3.25, and above the analyst consensus of $3.17. The company also reported a book-to-bill ratio of 1.33x for the quarter, indicating robust future demand.
In addition, DXC Technology has increased its full-year free cash flow guidance to approximately $625 million, up from the previous estimate of $550 million. Looking ahead to the fourth quarter of fiscal 2025, the company projects revenue between $3.10 billion and $3.13 billion, representing a YoY organic decline of 5.5% to 4.5%. DXC Technology also anticipates an adjusted EBIT margin of approximately 7.0% and non-GAAP diluted EPS of about $0.75 for the quarter. These are the recent developments from DXC Technology.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.