Xerox surges 9% on upbeat 2026 guidance after Lexmark integration
Print and document giant targets $7.5B+ revenue, $200M+ operating income growth as integration ahead of schedule
Xerox Holdings Corporation shares surged 9.4% in pre-market trading Thursday after the company delivered strong 2026 financial guidance that signaled accelerating momentum from its acquisition of Lexmark International and a broader corporate turnaround strategy.
The document management and printing technology company forecast revenue exceeding $7.5 billion at constant currency for 2026, with adjusted operating income projected to grow by more than $200 million compared to fiscal 2025 levels. The guidance, released alongside fourth-quarter and full-year 2025 results, reflects increasing confidence in the $1.5 billion Lexmark acquisition completed in July 2025.
"The integration with Lexmark is progressing ahead of schedule," Xerox executives noted, with synergy targets now increased by $50 million to at least $300 million total. Approximately $150 million in synergy savings is expected to be realized during 2026, helping drive the projected operating income expansion.
For the fourth quarter of 2025, Xerox reported revenue of $2.03 billion, representing a 25.7% increase year-over-year, or 23.6% in constant currency. However, on a pro forma basis excluding Lexmark contributions, revenue declined 9.0%, highlighting the continued pressure on Xerox's legacy printing business amid declining document volumes.
The company generated free cash flow of $184 million during the quarter, demonstrating strong cash generation capabilities even as the company invests in integration costs. Operating cash flow totaled $208 million for the period.
The bullish 2026 outlook centers on several key drivers: a full year of Lexmark contributions, continued growth in IT Solutions and Digital Services segments, and an improving trajectory in the printing business. These gains are expected to partially offset ongoing challenges including declines in core revenue, reduced Xerox Financial Services revenue as the receivable portfolio winds down, and the planned exit of certain production equipment lines.
Xerox's market capitalization stands at approximately $273 million, reflecting a significant recovery from its 52-week low of $2.10 reached during the past year. The stock remains well below its 52-week high of $8.51, suggesting considerable upside potential if the turnaround gains traction and guidance targets are met.
Analysts maintain a cautious but improving stance on Xerox, with consensus forecasts for 2026 earnings per share ranging between $1.01 and $1.08, according to market research data. The company's focus on higher-margin digital services and IT solutions, alongside the Lexmark integration, represents a strategic shift away from its traditional hardware-dependent business model.
The stock's pre-market rally of 9.4% signals investor enthusiasm for what could mark an inflection point in Xerox's multi-year transformation effort. With Lexmark integration synergies ahead of plan and the unified suite of retail solutions already debuting at industry events including NRF 2026, management appears to be executing on its stated operational priorities.
Investors will watch closely in coming quarters for evidence that the projected $200 million-plus operating income expansion materializes and that the company can sustain free cash flow generation while integrating the larger Lexmark organization. Successful execution would validate what has been a challenging and expensive turnaround strategy for one of the corporate technology sector's most iconic brands.