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Xerox Holdings Corp XRX

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Xerox Rebounds With Return to Office, but Still Far Below 2019 Levels; Shares Fairly Valued

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

Xerox finished its second quarter with both the top and bottom lines above our expectations as increased vaccinations and companies returning to offices brought tailwinds to the no-moat company. Zooming out, we see the company trying to pivot away from equipment-based revenue via organic and inorganic means. Coupled with this pivot, Xerox is aiming to improve its operating leverage via Project Own It. While we view the pivot and increased operational efficiency positively, we do not expect any new business ventures to offset the massive equipment declines, at least within our explicit five-year forecast. As a result, we are maintaining our $22 fair value estimate and view the shares as fairly valued.

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Company Profile

Business Description

Xerox is an original equipment manufacturing and software company. Xerox operates in one segment--design, development and sale of printing technology and related solutions--while deriving 60% of its revenue from the U.S., and 40% from international markets. The company is an OEM of multifunction printers, or MFPs (printers that can print, copy and scan), focusing on large enterprise markets. Apart from equipment, the company provides post sales services like managed print services--a service that helps to bring smart servicing and efficiencies to how employers use their print/copy equipment. Xerox is attempting to enter new markets like digital print packaging solutions and printed electronics.

201 Merritt 7, P.O. Box 4505
Norwalk, CT, 06851-1056
T +1 203 849-5216
Sector Technology
Industry Information Technology Services
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type High Yield
Employees 24,000