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Shares of Xerox Corporation (XRX - Analyst Report) hit a 52-week high of $12.08 during yesterday’s trading session. However, the stock closed the session at $12.03, which reflects a solid year-to-date return of 67.3%. The average trading volume aggregated 8.8 million shares.

Xerox recently upped the quantum of its bond offering after an upgrade of investment grade rating from BBB- to BBB by global credit rating agency Standard & Poor’s. The boost in the credit rating by one notch has enabled the company to raise bond offering to $500 million from $300 million planned earlier. At the same time, Xerox generates significant cash flow and deploys it to maximize shareholder value. These are some of the catalysts driving the stock.

Growth Drivers

Xerox expects continued demand from small and midsize businesses in the United States and positive trends in the high-end of its business going forward.

In order to better adapt to the changing market trends, Xerox is also continually shifting its business model by expanding indirect distribution channel and streamlining its supply chain and product portfolio. Going forward, the company expects to increase revenues from the Services segment to 66% of total revenue by 2017.

To achieve this objective, Xerox is focusing more on vertical markets like healthcare. The company has already begun to reap huge benefits from Medicaid Management Information System (MMIS) through the successful implementation and CMS (Centers for Medicare and Medicaid Services) Certification in 31 state Medicaid program.
    
The increase in contract value of service signings and the growing pipeline are strong indicators for robust growth of the company. At the same time, Xerox is continuing its thrust for leadership in Document Technology with innovative products in order to meet the demands of customized communications in digital printing.

Estimate Revisions

Over the last 30 days, none of the analysts revised their estimates upward or downward for 2013 which led to the Zacks Consensus Estimate being constant at $1.09 and $1.13 for 2013 and 2014, respectively.

Other Stocks to Consider

Xerox currently has a Zacks Rank #4 (Sell). Other stocks that look promising and are worth a look include Pitney Bowes Inc (PBI - Analyst Report), USA Technologies Inc (USAT) and VASCO Data Security International Inc (VDSI - Snapshot Report). All these have a Zacks Rank #2 (Buy).

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