Citigroup Initiates Sell Recommendation on Xerox Holdings, Forecasting 16.10% Upside

Citigroup initiated coverage of Xerox Holdings with a Sell recommendation, forecasting a 16.10% stock price upside. Xerox Holdings' projected annual revenue growth is 4.93%, and the non-GAAP EPS is estimated at 2.57. Institutional investors, including the Pacer US Small Cap Cash Cows 100 ETF and iShares Core S&P Small-Cap ETF, have increased their stake in Xerox Holdings. The put/call ratio suggests a bearish sentiment among investors.

Xerox Holdings (NASDAQ: XRX) recently received a Sell rating from Citigroup, with analysts Asiya Merchant and Michael Cadiz projecting a 16.10% upside in the stock price to $11. This rating comes as Xerox undertakes a significant restructuring effort, aimed at revitalizing the company in the face of flat-to-declining revenues [1].

Xerox's struggles stem from the impact of the pandemic, which resulted in a 33% year-to-date decline in its share price despite the company's attempts at reshaping its business through a 15% workforce reduction [1]. Analysts at Citigroup believe that Xerox's restructuring and cost-cutting efforts will need to be balanced with the company's focus on refining its services offerings in a competitive and OpEx-intensive market [1].

Xerox's revenue growth is projected to reach 4.93% annually, while its non-GAAP EPS is estimated at 2.57 [2]. Despite these projections, institutional investors, such as the Pacer US Small Cap Cash Cows 100 ETF and iShares Core S&P Small-Cap ETF, have increased their stakes in the company [2]. However, the put/call ratio suggests a bearish sentiment among investors [2].

The challenges facing Xerox are not unique, as many companies in the technology sector grapple with similar issues. However, Citigroup's Sell rating and price target reflect the analysts' concerns regarding Xerox's ability to navigate these challenges and achieve significant growth in the near term [1].

References:
[1] AndreyPopov/iStock via Getty Images. (2023, March 31). Xerox Initiated with Sell Rating Despite Restructuring Efforts, Citi Says. Seeking Alpha. https://seekingalpha.com/news/4120536-xerox-initiated-with-sell-rating-despite-restructuring-efforts-citi
[2] Merchant, A., & Cadiz, M. (2023, March 31). Xerox Stock: Sell, Citigroup Says. Barron's. https://www.barrons.com/amp/articles/xerox-stock-sell-citi-8cefddad