Xerox’s Top Line Sinks as Enterprise Print Demand Remains Low; Maintain FVE; Shares Fairly Valued

No-moat Xerox reported disappointing fourth-quarter results below our expectations. The time value of money offset the weak financial results’ impact on our fair value following our valuation model roll. As a result, we are maintaining our $18 fair value estimate. While COVID-19-related trends drove the financial weakness this quarter, we are also bearish on Xerox’s long-term prospects as we anticipate the print industry to remain in secular decline. We believe the market is valuing Xerox’s business accurately, and we view the company’s shares as fairly valued.