DXC Technology
Thesis
Recommendation to long DXC Technology with a 3-yr target price of $70 due to ongoing earnings stabilization led by the new CEO, an undervalued Luxoft segment representing a $5 Bn valuation opportunity, and attractive current valuations given DXC’s earnings stabilization and asset-light, cash generative operations.
Did it work?
The thesis called for a 3-year recovery to $70 on earnings stabilization and Luxoft value recognition, but 71 months have elapsed and the stock is down 65.5% — moving decisively away from the target rather than toward it. The core premise of earnings stabilization under the new CEO clearly did not play out, as the business deteriorated instead. With the full stated horizon long passed and the return deeply negative against a long position, the thesis is decisively invalidated.