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Why Piper Jaffray Loves Xerox

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  • In a report issued Wednesday, Piper Jaffray analysts George K. Tong and Adrian S. Paz reiterated an Overweight rating and $15 price target on shares of Xerox Corp (NYSE: XRX).
  • Furthermore, the firm named Xerox as a 2016 top pick in business services due to the “Transformative and Strategic Catalysts” the experts see in the company.

Analysts at Piper Jaffray named Xerox a top pick for 2016 arguing that the company’s “transformation from a document technology provider to an outsourcing services leader (…) serves as a powerful catalyst for the shares.”

The experts believe the current review of its strategic portfolio and Carl Icahn's involvement have the potential to unlock substantial value for the company. In fact, they see upside potential of more than 40 percent over the next 12-18 months as strategic actions bring the company’s financial profile and valuation closer to its business services peers.

The report pointed out thee main elements to take into account when considering an investment in Xerox:

  • 1)   The company offers a “transformation story with distinct catalysts.”
  • 2)   Strategic levers should unlock value --stabilizing and improving operating performance.
  • 3)   On top of the strategic catalysts, the firm identified several “operating catalysts through 2017 for improving financial performance.” The analysts expect an acceleration in services revenue growth to 3.8 percent by 2017, "driven by the flow-through of recent services signings, verticalization efforts and the lapping of discontinued contracts.” Moreover, they believe “there is a positive setup for services operating margins to expand to 9.2% by 2017 driven by automation and efficiencies, offshoring initiatives, platform leverage and reduced government healthcare implementation costs.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Latest Ratings for XRX

Feb 2018JP MorganMaintainsOverweightOverweight
Jan 2018Standpoint ResearchDowngradesBuyHold
Oct 2017UBSMaintainsNeutral

View More Analyst Ratings for XRX
View the Latest Analyst Ratings

Posted-In: Adrian S. PazAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Tech Trading Ideas


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