Shares of DXC Technology (DXC) - Get Report were falling 4.1% to $29.67 Thursday after a Wells Fargo Securities analyst lowered his price target for the information technology company to $32 from $46 a share.
In a note to investors, analyst Ed Caso said he lowered the price target following the "the recent unexpected and abrupt resignation of CEO Mike Lawrie and the immediate shift to new CEO Mike Salvino.
"We remain concerned about even further reductions in the financial outlook," Caso said. "We expect the shares to remain volatile around current levels, despite current valuation levels."
On Sept. 12, Lawrie, who has been chairman, president and CEO since the Tysons, Va., company started up in 2017, said he would step down as president and CEO immediately and as chairman at year's end.
Salvino, who sits on DXC's board and most recently was a managing director at private-equity firm Carrick Capital Partners, was named to succeed Lawrie in the top two executive posts. Salvino also worked at the consulting firm Accenture.
Caso wrote that investors are increasingly concerned whether the company "can actually revive organic growth without meaningfully reducing the EBITDA margin outlook."
"Investors for years have looked past 'recurring non-recurring' expenses (expected by the company to be approximately $750 million in FY20)," he wrote.
Caso said risk to the company included predominantly revolve around Salvino's "ability to create organic growth without meaningful give back on EBITDA margin."
"We think under-investment by the prior CEO will make this effort challenging," Caso said.