Xerox Corporation (XRX) recently unveiled two new additions to its digital print portfolio, namely Xerox Color 550/560 Printer and Xerox 770 Digital Color Press. Xerox Color 550/560 Printer will increase productivity and color print quality of the products, thereby adding new dimensions to the print providers’ businesses.
On the other hand, Xerox 770 Digital Color Press will boost the print business of the providers with higher monthly print volume as the product enables expansion into applications such as photo books, direct-mail pieces, marketing materials and calendars.
In addition, Xerox added another feather to its cap when its Gen family of digital presses and toners became compliant with the Food and Drug Administration’s (FDA) guidelines for dry foods. Xerox has been long trying for the FDA approval of its solution to accommodate food packaging as the company is venturing into new markets and new businesses.
According to a research by Pira International, the worldwide digital printing market for packaging and labels is projected to reach $6.75 billion in the next four years. Xerox is well positioned to capitalize on the vast opportunity in the digital printing market for packaging and labels with its solution, which are upgraded at regular intervals to enhance efficiency and counter stiff competition.
All these together are expected to strengthen Xerox’s business going forward. The new products are efficient and will witness significant demand from the service providers. Alongside, the company has plans to launch more new products and upgrade the older ones in the category.
In the last reported quarter, Xerox earned an adjusted net income of $393 million or 27 cents per share compared with $342 million or 24 cents per share in the year-ago quarter. Revenues increased marginally by 2% year over year to $5.61 billion, driven by lower sales. The company expects to deliver better performance going forward based on its attempt to grow and expand its business, particularly Business Process Outsourcing.
Consequently, Xerox has projected adjusted earnings in the range of $1.07 to $1.12 per share for full-year 2011. However, intensifying competition and availability of substitutes for the company’s products have put the company on the back foot.
Thus, the shares of Xerox Corp. are maintaining a Zacks #3 Rank, which translates into a ‘Hold’ recommendation for the short term (1 to 3 months), and we reiterate our “Neutral” recommendation for the long term (more than 6 months).
