We project a slight revenue decline for 2026, due to a tough ECS comparison and muted growth in the ex-L&S revenue, with improving margins offset by higher interest expense.
ECS includes the legacy licensing business that is very sticky and has higher margins. UIS has seen license renewals at larger scopes and longer durations in this business.
Growth in the Digital Workplace Solutions (DWS) and Cloud, Applications and Infrastructure (CA&I) segments has been muted over the last couple of years. We expect this to continue in 2026, with a return to growth in 2027. However, we expect margins will continue to improve.
We expect management to remain focused on expenses and cash flow. The company should be well positioned to expand profitability as it returns to revenue growth. We expect the company to continue use cash to fund pension obligations, we also think the company will undertake further annuity purchases.
We expect UIS to continue to benefit from the digital transformation and secular tailwinds from artificial intelligence (AI) that is embedded in UIS's solutions, making them more competitive.
20 Jan 2026
2026 Outlook: We Expect 2026 Revenue To Decline Slightly, Driven By A Tough ECS Business Comparison; Expect Cash Flow To Remain Positive; Maintain $6 Price Target, High Risk Rating
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2026 Outlook: We Expect 2026 Revenue To Decline Slightly, Driven By A Tough ECS Business Comparison; Expect Cash Flow To Remain Positive; Maintain $6 Price Target, High Risk Rating
We project a slight revenue decline for 2026, due to a tough ECS comparison and muted growth in the ex-L&S revenue, with improving margins offset by higher interest expense.
ECS includes the legacy licensing business that is very sticky and has higher margins. UIS has seen license renewals at larger scopes and longer durations in this business.
Growth in the Digital Workplace Solutions (DWS) and Cloud, Applications and Infrastructure (CA&I) segments has been muted over the last couple of years. We expect this to continue in 2026, with a return to growth in 2027. However, we expect margins will continue to improve.
We expect management to remain focused on expenses and cash flow. The company should be well positioned to expand profitability as it returns to revenue growth. We expect the company to continue use cash to fund pension obligations, we also think the company will undertake further annuity purchases.
We expect UIS to continue to benefit from the digital transformation and secular tailwinds from artificial intelligence (AI) that is embedded in UIS's solutions, making them more competitive.