DXC Technology (DXC – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst James Faucette from Morgan Stanley maintained a Hold rating on the stock and has a $16.00 price target.
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James Faucette has given his Hold rating due to a combination of factors that suggest a cautious outlook for DXC Technology. The FY26 growth projections indicate a slower-than-expected return to growth, with management forecasting a 4% year-over-year decline in organic revenue. This gradual recovery is attributed to ongoing efforts to focus on execution and sustainable growth, which may keep EBIT margins within a narrow range of 7-8% and reduce adjusted EPS to $3, compared to $3.43 in FY25.
Despite some positive signs, such as consecutive quarters with a book-to-bill ratio greater than 1.0, the lower-than-anticipated growth guidance for FY26 raises concerns about potential deal delays due to economic pressures. Moreover, the introduction of equity grants for key executives aims to align incentives with company performance, focusing on metrics like free cash flow and revenue generation. However, the overall outlook remains cautious, leading to a reduction in FY26 estimates and a lowered price target of $16.
In another report released today, TD Cowen also maintained a Hold rating on the stock with a $17.00 price target.