Shares of Xerox (XRX) surged 5% on July 27 to close at $24.81 after posting better-than-expected Q2 results, driven by top-line growth. Meanwhile, results were negatively impacted by rising costs and expenses.
Xerox reported Q2 earnings of $0.47 per share, which more than tripled compared to the earnings of $0.15 per share reported in the prior-year period, and comfortably beat analysts’ expectations of $0.38. Adjusted revenues of $1.79 billion outpaced the Street’s estimates of $1.77 billion and advanced 18.1% from the year-ago period.
Gross margin was 35.6%, down 290 basis points on a year-over-year basis. Additionally, total costs and expenses surged 18.5%. (See Xerox stock charts on TipRanks)
Xerox CEO John Visentin said, “We saw growing demand for our products and services in the second quarter. Increased equipment sales and print volumes in many regions are consistent with a continuing, gradual return to the office and give us confidence to reaffirm our revenue and cash flow guidance for the year.”
Following the Q2 earnings beat, Credit Suisse analyst Matthew Cabral reiterated a Hold rating but lifted the stock’s price target to $21 (15.4% downside potential) from $20.
The rest of the Street is bearish on the stock, with a Moderate Sell consensus rating. That’s based on 1 Hold and 1 Sell. The average Xerox price target of $19 implies 23.4% downside potential to current levels. Shares have increased around 18% over the past six months.
Related News:
Apple Records Quarterly Beat; Shares Down After-Hours
Ecolab Q2 Results Beat Analysts’ Expectations
Following Positive Results, Wells Fargo Doubles Quarterly Dividend
