shares were tumbling on a slew of downgrades from Wall Street firms, a day after delivering a disappointing earnings report.
The barrage of bad news was weighing on the information technology consulting firm in Thursday morning trading, sending shares down 28% to $19.57, which would mark their lowest close since Nov. 9, 2020, when they closed at $19.54, according to Dow Jones Market Data. The stock was also the leading decliner in the
Analysts at TD Cowen downgraded shares of DXC (ticker: DXC) to Market Perform from Outperform in a Thursday report, trimmed their price target to $25 from $34, and reduced estimates.
Over the last few years, the company has made improvements in different segments of the business, but “spotty fundamental performance has persisted,” analysts wrote. Further, disappointing first-quarter results and a guidance slash make it difficult to support their thesis, they explained, which was built on revenue growth and other positive strides.
Analysts at Deutsche Bank struck a similar tone in a Thursday report, in which they downgraded shares to Hold from Buy and lowered their price target to $23 from $35. In March 2021, they upgraded shares to Buy, “on a turnaround story” with Chief Executive Officer Mike Salvino at the helm. However, since then, though improvements have been made in margins and free cash flow, among other areas, “progress has stalled and is now reversing,” Deutsche analysts wrote.
The CEO remains optimistic about the road ahead, analysts wrote, “but after several setbacks, we have lost confidence that the transformation journey is leading anywhere but further fits and starts.”
On Wednesday, DXC reported first-quarter adjusted earnings a share of 63 cents, below the 82 cents a share analysts had forecast. It posted revenue that fell from a year ago, citing a slowdown in client purchases “that are, in the short term, discretionary,” which include the resale of IT equipment and services project work, according to the release. DXC also slashed full-year guidance, citing a challenging economic environment.
A majority of analysts are on the sidelines of DXC, with 73% rating shares as Neutral, 13% as Buy, and 13% as Sell, according to FactSet.
Write to Emily Dattilo at [email protected]