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Why DXC Technology Stock Gained 21% in January

What happened

Shareholders of information technology specialist DXC Technology (NYSE: DXC) trounced the market last month as their stock gained 21% compared to an 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally just erased a small portion of recent paper losses for investors, though, and the stock remains lower by 30% in the past year compared to a 3% increase in the broader market.

Image source: Getty Images.

So what

Investors cheered news last month that DXC struck a deal to purchase Luxoft Holding for $2 billion. Management said in the acquisition announcement that it plans to take full advantage of Luxoft's digital capabilities and deep expertise in key industries like financial services and autonomous driving.

Now what

DXC Technology is hoping that the buyout will deliver a better growth pace for the company, whose sales have declined to $15.5 billion over the last nine months from $16.1 billion in the prior-year period. CEO Mike Lawrie and his executive team said in early February that they plan to reach sales of between $20.7 billion and $21.2 billion for the full year, down from $24.6 billion in 2018. The Luxoft acquisition should begin lifting those results starting in early fiscal 2020.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Luxoft Holding. The Motley Fool has a disclosure policy.

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