DXC Technology ( NYSE: DXC ) may not see much upside in a potential takeover amid recent speculation of an approach, according to a Stifel analyst.
Stifel's back-of-the-envelopment leverage buyout model suggests that its current stock price of $36 may be more closer to its approximate fair value, analyst David Grossman wrote in a note on Monday. That's in stark contrast to the a Street Insider report from Thursday that said a takeover price for DXC is speculated to be around $45/share.
Bloomberg reported last month that DXC was approached by at least one PE firm and was working with advisers after the takeover interest. Last Tuesday a Betaville dispatch reported that private equity firm KKR ( KKR ) may be eyeing the information-technology company.
DXC stock's "muted" reaction to the Street Insider item likely reflects the "lack of visibility on the strategic viability" of its business and issues valuing the outsourcing business, Grossman, who has a hold rating and $33 price target, wrote. He also pointed out that strategic and financial buyer interest in the past didn't lead to any transactions.
Grossman's LBO analysis sees a base case of $28/share and a bull case of $46/share. DXC shares rose 2.9% in trading on Tuesday.
Recall in January 2021, Reuters reported that French IT consulting firm Atos ( OTCPK:AEXAF ) made a takeover approach for DXC.
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DXC Technology may not have much upside in a potential takeout - analyst