Exela Stock Price Forecast 2022

As the business technology sector continues to grow, investors may be interested in diversifying their portfolios with some of the unique technology companies providing innovative solutions for the top U.S. businesses. Exela Technologies Inc. (NASDAQ: XELA) is a leader in the business process automation space, providing solutions to over 60% of the Fortune 100. Is XELA stock a good buy in 2022? Find out in the XELA stock forecast below.

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What Does Exela Do?

Exela provides business process automation tools to over 4,000 enterprise customers throughout 50 countries. Business process automation can be simply defined as reducing the need for human involvement by using technology for business tasks and processes.

Some of the products Exela provides to its customers include HR solutions, authorized digital signature solutions, a social intelligence platform and integrated end-to-end marketing solutions.

The company is currently based in Irving, Texas, and employs over 22,000 people.

Price History of XELA Stock

Exela launched as a blank check company named Quinpario on July 15, 2014, trading based on its cash assets in the $500 to $600 range. The company ranged upward for almost three years till June 2017, when it took a dramatic year-long downturn after its merger with SourceHOV and Novitex.

The company name was changed during the merger to Exela Technologies Inc. The bearish trend bottomed out at $268 in May 2018. The stock then attempted to recover, going up to a local high of $427.80 in October 2018, but was ultimately unsuccessful — since 2018, XELA stock has ranged steadily downward. Its current price as of Nov. 1, 2022, is $0.23, down over 99% from its 2018 peak.

Is XELA Stock a Good Buy?

Is XELA stock undervalued? Some analysts think so, but they don’t all agree. The company’s financials are bearish with an 8.96% drop in quarterly revenue and net income down 308.94%. On the other hand, the company beat both its Q1 and Q2 earnings per share by 10.02% and 32.48%, respectively.

According to Utradea, XELA stock has a price-to-earnings score of 3 out of 5, which means it’s well-valued compared to other companies in the space. It also has a return on equity score of 4 out of 5, meaning it’s undervalued compared to others in the space, due to stronger ROE. XELA stock has a current discounted cash flow valuation rating of 5, which suggests the stock may have strong fundamentals.

Analysts at InvestorsObserver rate XELA stock as a buy with a long-term score of 67 out of 100. They are less optimistic about the short term, giving it a short-term score of 8 out of 100.

The year 2022 has been rough for technology companies in general, with the S&P 500 information technology sector down 21.62% this year as of Nov. 1, 2022. If Exela begins to perform better and the market becomes more confident in the information technology sector, XELA stock could be due for significant growth.

If XELA stock was going to finally get out of its slump, then now would be a good time to buy, while the stock is cheap. While the possibility may be unlikely, if the company were ever to reach its 2018 high again, an investor who buys now would be set to net over 150,000% profit.

Will XELA Stock Go Up?

Multiple analysts are saying the stock can go up. Analysts polled by Nasdaq gave XELA stock a buy recommendation, with a prediction of a $2 12-month price target. Analysts at CNN are even more optimistic, with a low 12-month target of $2 after a 782.6% rise, a median 12-month target of $2.50 after a 1,003.3% rise and a high target of $3 after a 1,223.9% price increase.

If XELA stock rises to a $3 valuation in the next 12 months, $10,000 invested at the current prices would net the investor over $93,000 in profit.

Factors That May Affect Exela Stock

Recent changes in leadership at Exela may have a long-term effect on the company’s valuation.

On April 30, 2022, Ronald Cogburn, who has been CEO of Exela since its IPO in 2017, stepped down. The company is now led by Par Chadha, the executive chairman. Time will tell whether this leadership change will have a significant impact on the future of the company.

Exela recently sold its European division, XBP Europe, at a valuation of $220 million to CF Acquisition Corp VIII, a special-purpose acquisition company. The deal will close sometime in the first half of 2023. Exela is expected to still hold a majority share of XBP Europe when it goes public.

Divestments like this can help a company increase organizational efficiency and lower operating debts, which can be good for the stock. A positive IPO for XBP Europe may also increase investor confidence in XELA, since the company will hold a majority share.

Will XELA Reverse Split?

On July 25, 2022, Exela’s Board of Directors announced that the company would do a 1-20 reverse split to comply with NASDAQ listing requirements and to improve the stock’s marketability and liquidity. The split was effective at 5 p.m. the same day and the shares began trading at the split-adjusted levels the next day upon market opening.

Unfortunately, the reverse split was not effective in raising stock prices as XELA stock fell over 25% in response to the news. No further reverse splits have been announced since then.

Takeaways

XELA stock may be an interesting opportunity for investors looking for undervalued technology stocks. While the company cannot be considered a blue chip stock — a safe, reliable investment — it may be a good opportunity for significant profits for those investors who can stomach a bit more risk. A possible future uptick in financials and a large client list may make it a good stock to keep an eye on.

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This article originally appeared on GOBankingRates.com: Exela Stock Price Forecast 2022