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On Thursday, Stifel analysts, led by David Grossman, adjusted the price target for DXC Technology (NYSE:DXC) shares, bringing it down to $15.00 from the previous $24.00. Despite this reduction, the firm maintained a Hold rating on the stock. This revision followed DXC Technology’s fourth fiscal quarter performance which modestly exceeded expectations. However, the company’s guidance for fiscal year 2026 regarding revenue, earnings per share (EPS), and free cash flow (FCF) fell short of the consensus, leading to a 13% decline in the stock price after the market closed. According to InvestingPro data, DXC currently trades at $16.56 with a market capitalization of $3 billion, suggesting potential value opportunity based on its Fair Value analysis.
DXC Technology is currently grappling with both secular and cyclical challenges. The company’s Global Infrastructure Services (GIS) segment, which accounts for approximately half of its revenue, is encountering secular growth obstacles in outsourcing. Concurrently, the Global Business Services (GBS) division, also representing about half of the revenue mix, is facing cyclical headwinds in the consulting sector. These issues are compounded by the need for DXC to invest in restructuring its business operations. InvestingPro analysis reveals that despite these challenges, DXC maintains a strong free cash flow yield and trades at an attractive EV/EBITDA multiple of 4.12x, with total revenue reaching $13.09 billion in the last twelve months.
The company’s valuation in after-market trading (AMT) is approximately 9.5 times the projected free cash flow (FCF) for the calendar year 2026. Grossman’s FCF estimate considers capital lease payments as capital expenditures, which differs from the company’s guidance that excludes these payments. The analyst suggests that this valuation aligns with DXC’s profile as a no-growth company and believes it should provide some support for the stock unless there are further downward revisions.
Stifel’s analysis indicates that the current trading valuation is consistent with DXC’s lack of growth prospects, which is an important consideration for investors. The firm’s perspective is that the stock price should remain stable if there are no additional negative adjustments to the company’s financial forecasts.
In other recent news, DXC Technology reported impressive fourth-quarter earnings for fiscal 2025, surpassing analyst expectations. The company achieved an earnings per share (EPS) of $0.84, exceeding the forecasted $0.76, and reported revenue of $3.17 billion, slightly above the anticipated $3.14 billion. Despite these positive results, the company’s stock experienced a significant decline following the announcement. DXC Technology also outlined its plans to restart its share repurchase program as part of its strategic initiatives. Looking ahead, the company projects an organic revenue decline of 3-5% for fiscal 2026 and anticipates a non-GAAP EPS between $2.75 and $3.25. Morgan Stanley (NYSE:MS) maintained its Equalweight rating on DXC Technology but lowered the price target from $22.00 to $16.00, citing potential revenue declines and challenges in the ITO market. The firm also noted a decrease in the projected adjusted EBIT margin and adjusted EPS for the upcoming fiscal years. These developments highlight DXC Technology’s ongoing efforts to navigate market challenges and improve its financial performance.
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