DXC Technology
Thesis
DXC Technology is undervalued due to the market not recognizing the growth potential of its Luxoft segment, which has a significant total addressable market. The company is trading at a deep discount compared to peers and historical valuations, and the turnaround under new management is expected to stabilize operations and improve financial performance.
Did it work?
The long thesis rested on a turnaround under new management and the market eventually recognizing Luxoft's growth potential, but over 66 months DXC shares fell 56.4%, the opposite of the expected re-rating. Rather than stabilizing, the company's performance and valuation deteriorated decisively, invalidating the core turnaround and undervaluation arguments. With more than five years elapsed, this is well beyond any reasonable interim-noise window, so the thesis is clearly broken.