Xerox Shares Tumble Despite Impressive Revenue Surge

Xerox Holdings Corp. delivered what appeared to be stellar third-quarter 2025 financial results, yet investors responded by sending the stock sharply lower. The puzzling market reaction saw shares decline over 4% despite the company reporting a substantial 28.3% revenue increase to $1.96 billion. The most explosive growth came from Xerox's IT solutions division, which skyrocketed by 162.8% year-over-year.

Market experts remain unconvinced by the strong top-line performance. Citigroup analysts reduced their price target from $4.50 to $3.50 while maintaining a "neutral" rating on the stock. The consensus among research firms suggests a narrow trading range, with average price targets clustering between $3.50 and $3.75 per share. This cautious "hold" recommendation across the analyst community appears to be giving investors pause, despite the impressive revenue figures.

Options Trading Signals Bearish Sentiment

The skepticism extends beyond traditional equity analysis into derivatives markets. Unusual trading activity emerged in the options market with 1,689 put contracts changing hands—a volume that exceeded the daily average by a staggering 1,369%. This surge in bearish positioning indicates significant expectations for further price declines among sophisticated market participants. While institutional investors maintain substantial ownership with 85.36% of outstanding shares, portfolio reallocations appear to be underway.

Should investors sell immediately? Or is it worth buying Xerox?

Key quarterly performance metrics:
* Revenue: $1.96 billion (+28.3%)
* Adjusted earnings per share: $0.20 (versus expectations of -$0.18)
* Operating cash flow: $159 million
* Free cash flow: $131 million

Technical Analysis Points to Continued Pressure

Trading at approximately $2.84 per share, Xerox stock remains firmly below its 50-day moving average—a technical indicator that typically signals sustained downward momentum. Management has updated its full-year guidance, now projecting approximately 13% revenue growth and expecting adjusted operating margins of 3.5%. The company noted that its Lexmark integration is progressing more smoothly than anticipated, though questions remain whether these developments can reverse the current negative trend.