Research Update: Xerox Holdings Corp. Downgraded To 'BB' On Expected Continued Operational Headwinds And High Event Risk

U.S.-based print technology company Xerox Holdings Corp.'s second-quarter results were weaker than we expected due to COVID-19-related disruption, further delaying the company's business turnaround, in our view. While lock-down measures are easing, we expect continued revenue and profit pressures in 2020 due to work-from-home trends, and believe the health crisis could potentially contribute to accelerating digital transition and print revenue declines. We believe the company's growth challenges and higher risk tolerance will add operational uncertainty and increase the possibility of large-scale acquisitions to help stabilize revenues. We are lowering our issuer credit rating on Xerox to 'BB' from 'BB+'. The stable outlook reflects our expectation for some business recovery in the second half of 2020 and that the company's cash

...- U.S.-based print technology company Xerox Holdings Corp.'s second-quarter results were weaker than we expected due to COVID-19-related disruption, further delaying the company's business turnaround, in our view. - While lock-down measures are easing, we expect continued revenue and profit pressures in 2020 due to work-from-home trends, and believe the health crisis could potentially contribute to accelerating digital transition and print revenue declines. - We believe the company's growth challenges and higher risk tolerance will add operational uncertainty and increase the possibility of large-scale acquisitions to help stabilize revenues. - We are lowering our issuer credit rating on Xerox to '##' from '##+'. - The stable outlook reflects our expectation for some business recovery in the second half of 2020 and that the company's cash flow generation and meaningful capital resources will allow it to maintain adjusted leverage below 2.5x over the next 12 months....

Research Update