Market Overview

Analyst: Buy Xerox — Whether Fuji Deal Closes Or Not

Analyst: Buy Xerox — Whether Fuji Deal Closes Or Not
Related XRX
50 Biggest Movers From Yesterday
Earnings Scheduled For October 23, 2018
The Best And Worst Performing S&P 500 Stocks So Far In 2019 (TalkMarkets)

Xerox Corp (NYSE: XRX) said on Wednesday it has reached a merger agreement with Fujifilm in which the Japanese company will buy Xerox for $6.1 billion and combine the American company into its existing joint venture, Fuji Xerox. But the case for owning Xerox's stock could have been made without the deal, according to Loop Capital Markets.

The Analyst

Loop Capital Markets' Ananda Baruah maintains a Buy rating on Xerox's stock with a price target boosted from $38 to $45.

The Thesis

Xerox also reported fourth-quarter results, which by itself would have been compelling enough to justify buying the stock, Baruah said in a Thursday note. (See the analyst's track record here.)

The company earned $1.04 per share in the quarter, beating a consensus estimate of 96 cents per share, and guided its full fiscal year 2018 EPS to a range of $3.50 to $3.70. This should solidify the case for Xerox as a standalone business to hit $4 in EPS by 2019, Baruah said. 

Surprisingly, Xerox's confirmation of a merger agreement resulted in a muted reaction in the stock, but this represents an opportunity for investors, the analyst said. Baruah named four reasons to back the deal:

  • Xerox could benefit from increased portfolio size in large accounts.
  • Xerox would become more competitive through supply chain improvements.
  • Xerox's SMB strategy could be implemented in the Fuji Xerox venture.
  • An expansion into packaging and digital industrial inkjet.

Price Action

Shares of Xerox were down 0.26 percent at $33.97 early in Thursday's trading session. 

Related Links:

Xerox Pops As Icahn, Deason Wage War Demand Management Change, Strategic Alternatives

Morgan Stanley Swings From Cautious To Bullish On IT Hardware

Latest Ratings for XRX

Oct 2018CitigroupMaintainsBuyBuy
Jul 2018JP MorganMaintainsNeutralNeutral
Jul 2018CitigroupReinstatesBuy

View More Analyst Ratings for XRX
View the Latest Analyst Ratings

Posted-In: Ananda Baruah Fuji XeroxAnalyst Color News Price Target Reiteration M&A Analyst Ratings Best of Benzinga


Related Articles (XRX)

View Comments and Join the Discussion!

Latest Ratings

CGBDJP MorganUpgrades15.5
NLYJP MorganUpgrades10.5
NTNXMorgan StanleyUpgrades58.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

9 Best Energy Stocks To Own Before Earnings

Mattel Q4 Earnings Preview