JMP Securities analyst Douglas Ireland this afternoon raised his rating on Xerox (XRX) to Market Outperform from Market Perform, setting a $15 price target. The upgrade comes ahead of the company’s Q3 earnings report, which is due tomorrow morning before the opening.
Ireland writes in a research note that� “checks with 14 resellers across the country show positive momentum.” He adds that copier sales were robust in Q3, and that the tone of business improved as the recovery continued.
“We heard that the leasing business was strong in the quarter, picking up from a slump in previous quarters,” he adds. “Finally, resellers told us supplies were selling well, with metered per page managed print services having a positive impact on supplies pull-through. There was some expectation among the resellers we spoke with for strong 4Q supplies sales due to normal budget flush effects. There were no reports of promotions or discounting programs during the quarter, so we expect hardware gross margins to be about flat, an improvement from our previous expectation of an 80 basis point decline.”
For the quarter, his EPS forecast goes to 22 cents, from 20 cents. For 2010, he now sees 93 cents, up from 91 cents. For 2011, he goes to $1.08, from $1.05.
XRX is up 21 cents, or 1.9%, to $11.15.
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