Divergent Signals Emerge for Xerox as Put Volume Spikes

Xerox US98421M1062

Investors in Xerox Holdings Corp. are navigating a market sending conflicting messages. A significant surge in put option activity points to mounting near-term anxiety, even as research firms issue modestly improved ratings for the stock. This caution surfaces just ahead of a key corporate action involving the distribution of long-term warrants.

Trading activity on Thursday revealed a stark defensive posture among some market participants. Volume for put options, which gain value when a stock price falls, exploded to levels exceeding 1,300% of the daily average at times. This dramatic uptick indicates that traders are either seeking protection against potential share price declines or positioning for a short-term downturn.

This sentiment in the derivatives market contrasts with a slight uptick in analyst outlooks. Recently, Zacks Research upgraded its view on Xerox shares from "Strong Sell" to "Hold." This follows an earlier adjustment by Citigroup, which reaffirmed its "Neutral" rating in late January while setting a price target of $2.50. This target rests only marginally above the stock's last closing price of $2.29.

Strategic Warrant Issuance Details

A pivotal event for shareholders is now on the immediate horizon. The company is proceeding with a warrant distribution, a move designed to optimize its capital structure and accelerate debt reduction efforts.

• Record Date: Monday, February 9, 2026
• Distribution Ratio: One warrant for every two common shares held
• Exercise Price: $8.00 per share
• Issue Date: February 11, 2026
• Term: Warrants expire February 14, 2028

Given that the $8.00 exercise price sits far above the current trading range, these warrants are largely viewed as a long-term bet on the company's successful strategic turnaround.

Financial Performance and Forward Guidance

The recent market movements follow Xerox's fourth-quarter earnings report, released in late January. The company posted revenue of $2.03 billion, narrowly missing analyst consensus estimates of $2.05 billion. Management cited increased costs for DRAM memory chips and broader macroeconomic uncertainties as primary pressures. The quarter concluded with an adjusted net loss of $0.10 per share.

Despite these headwinds, the leadership team has reiterated its growth objectives. For the full 2026 fiscal year, Xerox is targeting revenue exceeding $7.5 billion, which would represent an increase of approximately 7%. The company also forecasts an adjusted operating profit in the range of $450 to $500 million.

The current skepticism reflected in the options market now clashes with management's medium-term recovery plan. The stock's trajectory will likely hinge on how investors digest the warrant distribution in February and whether operational results in the first quarter begin to substantiate the company's full-year targets.