NEW YORK (TheStreet) -- Xerox (XRX) was downgraded Monday to "market perform" from "outperform" by BMO Capital. The analyst firm maintained its $11.50 price target for the technology company.
Xerox fell 1.9% to $11.03 in early trading.
Analysts Keith Bachman, Jung Pak, and Gaurav Gupta wrote, "We upgraded XRX in January 2013, with valuation as a key catalyst, along with several others including improving services/technology mix, and FX/yen help. Not all of our views played out, but enough that the stock moved higher. However, we no longer see valuation as compelling. We think our estimates will have to move higher for the shares to move higher. We think our estimates are reasonable, with the most likely upside tension being share count and tax rate, which we don't see moving the stock higher."
Separately, TheStreet Ratings team rates XEROX CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate XEROX CORP (XRX) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations, notable return on equity, increase in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 55.14% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, XRX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Net operating cash flow has significantly increased by 61.78% to $961.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 45.01%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Office Electronics industry and the overall market on the basis of return on equity, XEROX CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the Office Electronics industry average, but is less than that of the S&P 500. The net income increased by 1.4% when compared to the same quarter one year prior, going from $282.00 million to $286.00 million.
- Despite the weak revenue results, XRX has outperformed against the industry average of 13.9%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: XRX Ratings Report