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Xerox Corp (NYSE:XRX) – May Test $10.50 Levels In The Short Term

Xerox Corp (NYSE:XRX) crashed by 8.75% in the last trading day of the last week after it reported a lackluster earnings for the first quarter. The volume shot up to 41 million against the daily average of 8 million only, as usual on a results day.

The quarterly revenue reported by Xerox Corp (NYSE:XRX) came at $4.50 billion, against the expected figure of $4.56 billion and the adjusted earnings came at $0.21 per share, exactly meeting the expectations but still reflecting y-o-y decline of 19%. The revenue reflected a decline of 6%. The most dramatic drop was noted in the free cash flow of the company, falling to a meager $38 million from the previous $202 million and the reasons are determined to be lower depreciation and amortization charges, coupled with a doubling of inventories year over year.


The street didn’t like the guidance offered by Xerox Corp (NYSE:XRX) at all. The full year EPS range was lowered to $0.95 to $1.01 from the earlier $1.00 to $1.06, against the expected $1.02 and Constant currency revenue is expected to fall by 1% y-o-y now. The second quarter EPS is estimated in $0.21-$0.23, against the expected $0.25.

The investors don’t like the results as the EPS in 2015 can be 8% weaker compared to the same in 2012, though the number of shares has decreased by 10% since then. This same sentiment is reflected on the charts too and the technical picture doesn’t look too encouraging for the bulls.

The price action in the last 6 years has been perfectly contained in a long term channel which has rejected the price in the last 3-4 months. The sharp crash on Friday indicates that unless the bulls manage a quick recovery and a firm close above $13.40, the probability of $10.50 or even lower levels will increase.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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