Goldman Sachs Sees and Inflection Coming in Shares of Xerox Corp. (XRX)

Goldman Sachs analyst, Matthew Cabral, reiterated his Buy rating on shares of Xerox (NYSE: XRX) and expects positive profit growth in 2018 for the first time in several years. The analyst expects to see benefits from a slowing pace of revenue declines and accelerating cost reductions.

He also sees two incremental sources of opportunity ahead:

1) upside to Xerox’s $1.5bn savings target, as we estimate >5pts of cost potential vs. HP Inc. with line-of-sight to $4 in EPS

2) $1bn of FCF in 2018, allowing for a return to buybacks following a two-year pause (GSe. $300mn in CY18)

The analyst stated "we see a catalyst-rich 6-12 months ahead for Xerox, beginning with 4Q earnings next week where we’re keenly focused on operating margin expansion and 2018 FCF guidance.

No change to the price target of $38.

For an analyst ratings summary and ratings history on Xerox click here. For more ratings news on Xerox click here.

Shares of Xerox closed at $32.38 yesterday.

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