Xerox Target of Unusually Large Options Trading (NASDAQ:XRX)

Key Points

• Traders bought an unusually large number of calls — about 4,535 contracts (a ~49% increase vs. typical) — a bullish options flow that, combined with heavy short-covering, helped amplify the stock move.
• Xerox beat Q1 estimates (EPS -$0.11 vs. -$0.20) with revenue up ~26.7%, and shares jumped roughly 36.9% on massively higher volume (35.4M vs. avg 3.75M).
• Fundamentals and sentiment remain mixed: the company is still unprofitable and highly leveraged (debt/equity ~8.94) with a consensus analyst rating of "Sell" and a $2.50 price target, posing medium-term downside risk.

Xerox Holdings Co. (NASDAQ:XRX - Get Free Report) saw unusually large options trading on Thursday. Stock investors acquired 4,535 call options on the stock. This is an increase of 49% compared to the typical daily volume of 3,034 call options.

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently modified their holdings of XRX. S Harris Financial Group LLC bought a new position in shares of Xerox during the fourth quarter valued at $25,000. Captrust Financial Advisors bought a new position in shares of Xerox during the fourth quarter valued at $26,000. Williams & Novak LLC bought a new position in shares of Xerox during the fourth quarter valued at $27,000. Arkadios Wealth Advisors bought a new position in shares of Xerox during the fourth quarter valued at $35,000. Finally, Levin Capital Strategies L.P. bought a new position in shares of Xerox during the fourth quarter valued at $36,000. 85.36% of the stock is owned by institutional investors.

Xerox Stock Up 36.9%

Xerox stock traded up $0.58 during mid-day trading on Thursday, hitting $2.15. The company had a trading volume of 35,447,290 shares, compared to its average volume of 3,754,773. The company has a current ratio of 1.11, a quick ratio of 0.79 and a debt-to-equity ratio of 8.94. The stock's 50 day moving average price is $1.56 and its two-hundred day moving average price is $2.27. Xerox has a 12 month low of $1.19 and a 12 month high of $6.80. The company has a market capitalization of $281.05 million, a PE ratio of -0.26 and a beta of 1.80.

Xerox (NASDAQ:XRX - Get Free Report) last released its earnings results on Thursday, April 30th. The information technology services provider reported ($0.11) EPS for the quarter, topping the consensus estimate of ($0.20) by $0.09. Xerox had a negative return on equity of 8.26% and a negative net margin of 14.65%.During the same period in the prior year, the business earned ($0.06) EPS. The firm's quarterly revenue was up 26.7% on a year-over-year basis. As a group, sell-side analysts anticipate that Xerox will post 0.29 earnings per share for the current fiscal year.

Xerox Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Thursday, April 30th. Stockholders of record on Tuesday, March 31st will be issued a dividend of $0.025 per share. This represents a $0.10 dividend on an annualized basis and a dividend yield of 4.7%. The ex-dividend date of this dividend is Tuesday, March 31st. Xerox's dividend payout ratio is presently -1.22%.

Wall Street Analyst Weigh In

Several equities research analysts recently weighed in on the company. Citigroup reaffirmed a "neutral" rating and issued a $2.50 price target (down from $3.50) on shares of Xerox in a research note on Friday, January 30th. Zacks Research downgraded Xerox from a "hold" rating to a "strong sell" rating in a report on Tuesday, March 3rd. Finally, Weiss Ratings reissued a "sell (d-)" rating on shares of Xerox in a report on Monday. One equities research analyst has rated the stock with a Hold rating and two have issued a Sell rating to the company. According to MarketBeat, Xerox presently has an average rating of "Sell" and a consensus price target of $2.50.

More Xerox News

Here are the key news stories impacting Xerox this week:

• Positive Sentiment: Q1 results beat revenue and EPS-loss estimates: Xerox reported ($0.11) EPS vs. a ($0.20) consensus and revenue up ~26.7% year/year, with management highlighting margin expansion and improved liquidity — a clear near-term positive catalyst for sentiment. Xerox Releases First-Quarter Results
• Positive Sentiment: Large call buying on Thursday: Traders purchased ~4,535 calls (about +49% vs. typical), signaling bullish speculative or hedged positions that can add upward price pressure. (internal options flow report)
• Positive Sentiment: Short-squeeze dynamics amplified the move: Coverage points to a short squeeze combined with the earnings/revenue beat as the reason for a sharp intraday spike, suggesting technical squeeze-driven upside beyond fundamentals. Short Squeeze And Earnings: Why Xerox Stock Spiked Thursday
• Positive Sentiment: New SMB offering could support revenue diversification: Xerox launched “Xerox IT as a Service” targeting SMBs, a growth initiative that may help stabilize recurring revenue over time. Xerox Launches Xerox IT as a Service
• Neutral Sentiment: Analyst/metrics write-ups provide detail but no major surprises: Zacks and other outlets parsed key metrics and context around the beats and misses — useful for modeling but not an immediate directional catalyst by itself. Compared to Estimates, Xerox (XRX) Q1 Earnings
• Neutral Sentiment: Company materials posted (press release, slide deck, call): Investors can review the slide deck and call for guidance details; these items support transparency but their net impact depends on updated guidance/visibility. Q1 Slide Deck / Press Release
• Negative Sentiment: Surge in put buying earlier in the week: Traders bought ~1,689 puts (a ~1,369% jump over typical), indicating sizable bearish or hedged positioning that could weigh on sentiment if fundamentals disappoint. (internal options flow report)
• Negative Sentiment: Company remains unprofitable and highly levered: Xerox still shows negative net margin and ROE and a very high debt/equity ratio, leaving the stock vulnerable if revenue momentum slows or interest costs rise — a medium-term risk for investors. (company financials)

Xerox Company Profile

Xerox Holdings Corporation NYSE: XRX is a global provider of document management technology and services. The company designs and manufactures a broad range of multifunction printers, production printers, digital presses and related consumables. In addition to its hardware offerings, Xerox delivers software and workflow automation solutions, managed print services and cloud-based document platforms that help organizations optimize their information-intensive processes.

Founded in 1906 as The Haloid Photographic Company, Xerox pioneered xerographic imaging in the late 1940s, launching the first plain-paper copier in 1959.

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