What's Icahn Mean For Xerox?

• Shares of Xerox Corp XRX have declined 22.37 percent year to date, with the share price almost touching its 52 week low on October 27.
• Kulbinder Garcha of Credit Suisse has maintained a Neutral rating on the company, with a price target of $10.
• Carl Icahn announced on November 23 that he had acquired a 7.1 percent stake in Xerox, while calling it an “undervalued stock.” Icahn is now the second largest stakeholder in the company.

Analyst Kulbinder Garcha mentioned that Xerox’s management has acknowledged Icahn’s investment, and that Icahn had noted in an SEC filing that “he would discuss potential operational changes and strategic alternatives with Xerox management. He also mentioned possible board representation.”

Garcha believes that the support of a “strong activist” was a “value added benefit” that could help the company improve its business. However, given the earnings misses over recent quarters, similar issues are expected to plague Xerox over the next few quarters, especially in its Services segment.

“Given Xerox is in an on-going strategic review, we believe the involvement of Carl Icahn increases the probability of a split, separation, or outright sale of the company, potentially unlocking shareholder value,” Garcha added.

Garcha also expects Icahn to have a say in the selection of the company’s new CFO, given Icahn’s experience in “advising companies across various industries.”