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Research Alert: CFRA Keeps Hold Recommendation On Shares Of Dxc Technology

· 02/04/2021 20:23

01:20 AM EST, 02/05/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We lift our 12-month target by $7 to $29, 9x our FY 22 (Mar.) EPS estimate, deeply discounted to peers and justified by both structural and growth challenges. We raise our FY 21 EPS estimate to $2.36 from $2.22 but cut FY 22's EPS to $3.23 from $3.55. DXC prints Dec-Q adj-EPS of $0.84 vs. $1.25, topping consensus by $0.30, aided by a lower tax rate (10.2% vs. 30% expected) from the reversal of tax reserves. Revenues were $4.29B, down 14.6%, but surpassed consensus by $94M, on a mid-single-digit sequential rise in Analytics and Engineering and Cloud and Security. Given book-to-bill has come in over 1.0x for three consecutive quarters, at some point, DXC's growth outlook should improve. If the trajectory does not change, we fear it could imply: 1) conversion rates on newly signed business could be stalling, or 2) contract terminations are preventing a meaningful turn to growth. Unfortunately, both recent (and future) divestitures could partly mask the true progress DXC is making in the meantime, in our view.