Xerox Inks Contract with Illinois - Analyst Blog


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Xerox Corporation ( XRX ) has been on a deal-signing spree of late. After entering into an alliance with CHOICE Administrators Exchange Solutions for delivering cloud-based Health Insurance Exchange (HIX) solutions and renewing its deal with New Mexico's Human Services Department last month, the company has now recorded yet another contract win.

The company will now provide electronic benefit transfer (EBT) services to the state of Illinois for distributing benefits for the Supplemental Nutrition Assistance Program (SNAP) along with providing cash assistance on a refillable card, which can be used for making purchases at certified retailers and ATMs. The contract, which has a five-year tenure, is valued at $42 million, with an option to extend it for another five years.

Awarding the contract to Xerox was a natural step for the state of Illinois. The company has provided support to the state's nutrition program for almost a decade as a subcontractor. The new deal makes Xerox the prime contractor for the program, enabling it to process transactions, manage relationships with retailers and ATM networks, issue EBT cards and provide customer support.

Moreover, Xerox has proven expertise in providing EBT services. It caters to 20 million people in 16 states which run such programs. Hence, the current deal further strengthens the company's position in this space.

In addition, the company is deeply involved with a number of states for administering different types of programs, such as health care and nutrition. It is focused on bringing innovation in this sector through its solutions which enable the states to implement the required programs at a low cost.

We currently have a long-term Neutral recommendation on Xerox. The company, which competes with Canon, Inc. ( CAJ ) and Hewlett-Packard Company ( HPQ ), maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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