Price target change and rating
BMO Capital increased its price target for DXC Technology (NYSE:DXC) to $17.00 from $15.00, while leaving its coverage at a Market Perform rating. The new target implies only a small upside from the stock's current trading level of $14.61. InvestingPro data cited in the update shows DXC trading at a low price-to-earnings ratio of 6.51, and the stock is characterized as appearing undervalued when compared to available Fair Value estimates.
Quarterly results versus guidance
DXC reported third-quarter 2026 results that topped Wall Street expectations on the key metrics disclosed. The company posted earnings per share of $0.96, versus an expected $0.83, a surprise calculated at 15.66%. Quarterly revenue was $3.19 billion, narrowly exceeding the consensus estimate of $3.18 billion. Despite those upside surprises, the stock slipped modestly in aftermarket trading.
Alongside the results, management adjusted the fiscal year revenue outlook by lowering the midpoint of guidance. BMO highlighted disappointment in the firm's fourth-quarter revenue guidance, noting the guidance reduction as a point of concern.
Bookings and demand trends
The company reported a 17% year-over-year decline in bookings during the quarter. BMO characterized this decline as reflective of continued weakness in short-term discretionary work, underscoring demand pressures that can affect near-term revenue profiles.
Progress and ongoing challenges
While BMO acknowledged that DXC has shown progress on initiatives tied to artificial intelligence and go-to-market activity, the firm cautioned that management still faces a lengthy path to complete the company's turnaround and to achieve revenue stability. The analyst's decision to maintain a Market Perform rating signals a neutral stance despite the modest increase in the price target.
Market context and investor takeaway
The juxtaposition of an earnings beat and narrowed guidance, together with a sizable drop in bookings, presents a mixed picture for investors. On valuation metrics, the low P/E flagged by InvestingPro supports the view that the stock may be priced conservatively, yet operational headwinds and guidance revisions temper near-term optimism.