DXC Technology Q3 revenue slightly beats expectations

Overview

• Enterprise tech firm's Q3 revenue slightly beat analyst expectations

• Adjusted EPS for Q3 beat analyst expectations

• Company repurchased $65 mln of shares and redeemed $300 mln of senior notes

Outlook

• DXC expects Q4 revenue between $3.16 bln and $3.19 bln, down 5.0% to 4.0% YoY

• Company forecasts full-year revenue of ~$12.69 bln, down ~4.3% YoY on organic basis

• DXC revises full-year adjusted EBIT margin to ~7.5% from prior 7.0% to 8.0% range

Result Drivers

• AI EXPANSION - DXC is expanding AI use in solutions to enhance client value and reposition as a strategic partner, per CEO Raul Fernandez

• DISCIPLINED EXECUTION - Co attributes profit margins and free cash flow to disciplined execution across business

• BOOKINGS DECLINE - Bookings declined 17% YoY despite improved book to bill ratio of 1.12x

Key Details

*Applies to a deviation of less than 1%; not applicable for per-share numbers.

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is no "strong buy" or "buy", 9 "hold" and 2 "sell" or "strong sell"

• The average consensus recommendation for the it services & consulting peer group is "buy."

• Wall Street's median 12-month price target for DXC Technology Co is $15.00, about 4% above its January 28 closing price of $14.43

• The stock recently traded at 5 times the next 12-month earnings vs. a P/E of 4 three months ago

Press Release: ID:nPn5lh7Tka

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