Xerox (XRX) has received a new Hold rating, initiated by Citi analyst, Asiya Merchant.
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Asiya Merchant has given his Hold rating due to a combination of factors impacting Xerox’s current market position. The company is undergoing restructuring and cost reduction efforts while facing declining trends in its core print business. Although Xerox is attempting to expand its IT Services segment through acquisitions like ITsavvy and integrating Lexmark, these efforts have not yet resulted in significant revenue growth, which affects the company’s free cash flow expectations.
Despite these challenges, the stock’s current valuation, trading at a discount compared to its peers, suggests that these negative aspects are already reflected in the price. The print industry continues to face structural declines, and while Xerox is targeting growth areas like A4 color and high-end markets, the overall demand remains weak. Additionally, the recent departure of the company’s COO introduces further execution risks. Given these circumstances, the rating reflects a cautious stance awaiting more stable revenue growth and successful integration of its strategic initiatives.
Merchant covers the Technology sector, focusing on stocks such as Amphenol, Seagate Tech, and Dell Technologies. According to TipRanks, Merchant has an average return of 29.7% and a 77.10% success rate on recommended stocks.
In another report released on August 3, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $4.00 price target.