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DXC Rises as Wells Fargo Upgrades on Valuation, Balance Sheet

DXC Technology was upgraded at Wells Fargo, which cited the IT services company's valuation and improved balance sheet, among other factors.
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Shares of DXC Technology,  (DXC)  the provider of consulting and outsourcing services, jumped on Wednesday after analysts at Wells Fargo upgraded the stock to overweight from equal weight on valuation.

The firm affirmed a $48 price target on the Tysons, Va., company, which trades at a discounted valuation, according to analyst Timothy Willi. 

And the investment firm is bullish on DXC's management. 

DXC is now "in a position where favorable external demand dynamics and improved internal execution (culture/operations) should enable the company to begin to move towards sustainable revenue/earnings per share growth," Willi said. 

DXC has also improved its balance sheet, which could lead to accretive M&A and/or share buybacks, Wells Fargo said.

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The shares are up nearly 60% year to date. At last check they were 4.6% higher at $39.87. 

Last week, the company reported fiscal-fourth-quarter earnings of 74 cents a share as revenue declined 9% to $4.4 billion. Both results topped analyst estimates for the quarter. 

For the year DXC expects revenue between $16.6 billion and $16.8 billion. Analysts are expecting revenue of $16.76 billion. 

The stock jumped in January after French tech-services provider Atos SE had proposed to acquire the company.

Reuters, citing sources with knowledge of the matter, reported that Atos made a formal approach to DXC about a potential takeover valuing the company at more than $10 billion including debt.

DXC, employing 138,000, provides analytics, cloud, security and business process services to clients in the insurance, automotive, aerospace and defense industries.