Xerox stock price target cut to $4.50 by Loop Capital

Tuesday, Loop Capital analysts adjusted the price target on Xerox (NASDAQ:XRX) shares, reducing it to $4.50 from the previous $5.50, while maintaining a Hold rating. The price target revision comes on the heels of Xerox’s first-quarter earnings report released last Sunday. According to InvestingPro data, the stock has experienced significant volatility, falling over 58% in the past year, though it has shown a strong 15% return in the past week. The company currently trades below its Fair Value based on comprehensive analysis.

The company posted a mixed set of results for the March quarter, showing weaker revenue and margins but demonstrating solid underlying execution. Financial metrics from InvestingPro reveal a 7.45% year-over-year revenue decline to $6.18 billion, with gross profit margins at 31%. Despite a 1.1% constant currency (CC) decline in revenue, the trajectory is showing signs of improvement, particularly in the core equipment segment, which saw a roughly 1% decrease after adjustments for backlog and reinvention noise. Notably, entry-level installations grew by 33%, indicating the A4 segment’s sustained strength. The company maintains a significant 9.77% dividend yield, having sustained dividend payments for 19 consecutive years.

Xerox’s operational expenses (OpEx) have decreased significantly year-over-year due to ongoing reinvention initiatives, and the company is starting to see early benefits from the integration of ITsavvy, which are exceeding initial expectations. Although post-sale trends continue to face challenges, they are expected to improve within the next two to three quarters.

The company has reaffirmed its full-year 2025 guidance, undeterred by potential tariff risks. Xerox has plans to mitigate these risks by moving most of its China-produced goods to countries with lower tariffs. Additionally, the IT cross-sell pipeline has strengthened, with over 20 deals added from existing print clients.

Preparations for the integration of Lexmark are now in the final stages, with the acquisition anticipated to be finalized following regulatory approval from China. Xerox is treating the current year as a period of transition and continues to set its sights on 2026 as a year of significant growth in revenue, operating income, and free cash flow. While currently unprofitable, analysts tracked by InvestingPro predict a return to profitability this year with an EPS forecast of $0.89. For deeper insights into Xerox’s financial health and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Xerox Holdings Corporation reported its first-quarter earnings for 2025, which fell short of expectations. The company posted an adjusted loss per share of $0.06, missing the anticipated earnings per share of $0.10. Revenue also underperformed, reaching $1.46 billion compared to the forecasted $1.54 billion. Despite these setbacks, Xerox maintained its full-year guidance and highlighted significant growth in equipment installations, which increased by 24%. The IT Solutions pipeline also expanded by 26% since the acquisition, signaling potential future growth. Analysts from Loop Capital and Morgan Stanley (NYSE:MS) expressed interest in the company’s strategic initiatives, noting the potential for cross-selling opportunities between print and IT solutions. The integration of IT Savvy is reportedly ahead of schedule, contributing to Xerox’s optimistic outlook. However, the company faces challenges such as tariff uncertainties and market pressures, which may impact future profitability. Despite these hurdles, Xerox remains focused on its strategic direction and upcoming acquisition of Lexmark, expected to be immediately accretive.

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