DXC Technology’s stock price dropped by 18% on Friday after the company announced a new restructuring plan and predicted lower revenue and profit for fiscal 2025. This move comes after a failed sale bid last year, the departure of top executives, and a slowdown caused by high interest rates. The restructuring will incur an additional $250 million in costs and focus on reducing excess capacity in the legacy business.
The new management is facing challenges despite multiple leadership changes over the years, as analysts at RBC Capital Markets questioned DXC’s ability to be fixed. J.P.Morgan analysts noted that investors may not be receptive to another restructuring that impacts cash flow and halts share repurchases. The company had announced a $1 billion buyback in May 2023, but its shares have declined by 13% in 2024 and a total of 30% over the past two years, losing over $635 million in market value on Friday. At least nine of the 14 analysts covering the stock had revised their target prices downwards due to the recent developments.
