SG Cowen upgraded Xerox (XRX) to buy.
Analyst Steve Weber says while he remains cautious, he thinks revenue trends should be improving; he expects enough margin improvement to deliver 25% earnings per share growth in 2004, and even better in 2005. He notes the stock trades at about 12 times his 2004 earnings per share estimate, and merely nine times the 2005 (a hefty 40% discount to the S&P 500 p-e ratio).
Weber says the stock appears to have significant valuation upside relative to S&P 500. He says 2004 earnings may grow 23%, to 80 cents earnings per share, and 2005 earnings could jump to $1.05 a share. Weber also thinks the copier and printer maker could regain enough market share over the next two to three years through the launch of several new products to offset the decline in equipment prices.