Why Xerox Corp Shares Could Stall
While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Xerox Corp traded sluggishly today after Citigroup downgraded the document management technologist from buy to neutral.
So what: Along with the downgrade, analyst Jim Suva reiterated his price target of $13, representing just 5% worth of upside to yesterday's close. So while momentum traders might be attracted to Xerox's price strength over the past year, Suva's call could reflect a sense on Wall Street that its growth prospects are baked well into the valuation.
Now what: According to Citi, Xerox's risk/reward trade-off is pretty balanced at this point. "To be clear, we applaud XRX's continued efforts to transform itself to a services related organization (with services now representing more than 55% of total revenues) given secular challenges in print hardware, FCF generation and shareholder returns (7% including buybacks and dividends)," said Suva, "but at current multiples we believe the shares are adequately valued and reflect near terms risks associated with the loss of these contracts and implementing a large contract in a newer state which tends to have high initial start-up costs." With Xerox shares up more than 35% from their 52-week lows and trading at a lofty PEG above 1.5, holding out for a wider margin of safety certainly seems prudent.
Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!
The article Why Xerox Corp Shares Could Stall originally appeared on Fool.com.Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.