NEW YORK (TheStreet) -- Xerox Corp (XRX) held its annual investor conference yesterday, updating progress on its strategy and diversified portfolio, leaving one analyst still uncomfortable with recommending its stock at current levels.
"While we like XRX's strategy, we are not comfortable recommending the stock at current levels relative to our $14.50 target price," BMO Capital Markets analyst Keith Bachman said.
"We retain our 'market perform' rating on XRX. With lower 2015 guidance, we think the opportunity to make estimates improves. XRX has generally made analyst EPS estimates, although it has not been as consistent making revenues estimates," Bachman said.
"For the shares to push meaningfully higher, we think XRX has to make the long awaited $1.20 type of earnings level, which we think is think is possible for 2016," Bachman added.
"Increasingly, companies and governments are seeking partners to support essential processes - from document management to benefit administration. Xerox is well positioned to capture this opportunity as a result of our deep process expertise, global reach and innovation," Xerox CEO Ursula Burns said at the conference.
"We've also been diligent in identifying specific markets where we'll compete and we're seeing the benefits of this focus. Good examples are in transportation and healthcare," Burns added.
Shares of Xerox are down 0.22% to $13.49.
Separately, TheStreet Ratings team rates XEROX CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate XEROX CORP (XRX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, XRX's share price has jumped by 29.00%, exceeding the performance of the broader market during that same time frame. 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.
- XEROX CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, XEROX CORP increased its bottom line by earning $0.93 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $0.93).
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
- 36.60% is the gross profit margin for XEROX CORP which we consider to be strong. Regardless of XRX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, XRX's net profit margin of 5.19% compares favorably to the industry average.
- You can view the full analysis from the report here: XRX Ratings Report