Xerox (XRX) shares continue to slide upon Wednesday's announcement that the printing device company will be cutting 15% of its workforce.
Xponential Fitness (XPOF) also ticks lower after Piper Sandler analysts downgraded the stock to "Neutral" and trimmed its price target from $21 to $13 per share.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
JULIE HYMAN: Shares of Xerox-- were watching those as well. They are down after the company announced it will be cutting its workforce by 15%. This comes as part of Xerox's transformation strategy as it looks to improve and stabilize its core print business. The shares down by 12%.
And you know, it's not unusual when you get an announcement like this for the stock to go up. But that is not what is happening today. It looks like that investors on the one hand say, well, this is good in terms of helping improve the company's expenses. But on the flip side, it says, what does it signal that they are doing this kind of a move here as it is, again, part of what they're calling this transformation strategy?
- Yeah, 15%-- I mean, the reports I'm reading say that does suggest about 3,000 people. So it's significant. Investors, though, you said, not too impressed. And you're right-- I mean, usually on a headline like that, you can see a pop, but not here.
We did have some analysts on the Street kind of saying, well, you know-- and by the way, no love on the Street. I mean, none. There are four holds, three sells, and zero buys at this point. An analyst did say, listen, improved 2024, free cash flow, likely limited absolute debt could help avoid a liquidity crunch here.
Yet they also pointed out that kind of workforce cut, in their opinion, could highlight manages top line growth challenges here. And maybe that helps explain the kind of reaction you're seeing in the stock.
JULIE HYMAN: Yeah.
- And finally here, let's get a look at shares of Xponential Fitness taking a hit today. That's after Piper Sandler downgraded that franchisor of fitness brands to neutral from overweight. Cut the price target to 13 from 21. So the news here-- Piper cuts the stock to neutral, they're officially now on the sidelines.
And the price target, as we said, goes to 13 as well. That's actually a Street low, by the way. Not confident any longer in the ability of this company to actually achieve long term growth and margin bogeys. They say reports questioning management's credibility continue to be an overhang on the stock, could likely persist for another few quarters and limit share upside, despite, they say, valuation looking pretty cheap at these current levels.
JULIE HYMAN: Yeah, this is a franchisor of some well known brands, including club Pilates, Rumble, the boxing gym, Pure Barre as well. The stock did fall 44% last year.
- It's been shelled.
JULIE HYMAN: What's interesting is Piper had been overweight. I think they initiated coverage back in August, and the stock is also down about 40% since that time. So they've sort of ridden it on the way down here. Now, they're like, enough with this now neutral rating. So Xponential is going to be one to watch here going into 2024 to see if in-person fitness picks up and also to see if management can regain the credibility or the belief of the Street.
- Yeah, indeed, this is debated there, because, remember, the stock actually popped a few weeks ago, because the team at Stifel, they upgraded this one to a buy. And their point was they thought the current risk reward reflected just too much negativity in their opinion. But clearly, the crew at Piper disagrees.
JULIE HYMAN: Yes.
