CNDT - Conduent Selling Subsidiaries To Enable Profitable Growth

2024-07-04 04:08:40 ET

Summary

• Conduent is undergoing a transition to improve profitability and growth, through divestitures and debt reduction.
• Despite revenue declines, potential profitability could lead to excellent results for shareholders, making it a Buy.
• I have a one-year price target of $4.14, which would be a 24.32% gain on the July 3, 2024 close of $3.33.

Investment thesis

Digital outsourcing company Conduent Incorporated ( CNDT ) is in the middle of a transition, one that it hopes will return it to profitability and growth. One important element of that transition involves selling off some of its subsidiaries and using the cash to reduce debt and make the firm more nimble (its word).

Divestitures are proceeding, and the company is making slow but steady progress toward its goal. Since Conduent generates revenue of more than $3 billion a year, a profitable income statement could deliver excellent results to shareholders....

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