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Pitney Bowes (PBI) Extends Strategic Partnership with HP


Premium technology company, Pitney Bowes Inc. PBI, recently declared the renewal and extension of its global strategic partnership with HP Inc. HPQ. The two technology behemoths have delivered integrated print to mail solutions for high impact customer communications since 2009.

The collaboration between these two companies has launched several industry-leading solutions, including the Pitney Bowes IntelliJet Printing Systems, which has driven revenues and streamlined operations for users. This strategic partnership enables clients to deliver accurate, precise and personalized communications to their clients from a single solution provider by offering access to industry-leading technology.

Recently, the company also announced that Renkim, a major player in the financial and mission-critical documents industry has bought two AcceleJet printing and finishing systems to streamline its print to mail workflow. The two new AcceleJet systems are going to replace seven legacy printers and are critical for the company’s redesigned floorplan and streamlined workflow.

However, despite improving business trends and portfolio repositioning to drive growth, the shares of this Zacks Rank #4 (Sell) company have had a disappointing run on the bourse in the last six months. Its shares have declined 5.5%, against the industry’s gain of 3.3%.

The fact remains that softness in the company’s North American mailing business has yet to subside completely. In the recently reported second-quarter 2017 results, the company’s Small and Medium Business Solutions revenues dipped 3% year over year to $436.4 million. Additionally, decline in recurring revenues and poor equipment sales proved to be a drag on the International Mailing Business. Uncertain global economic environment is anticipated to impact production mail and software businesses in the near term, consequently limiting growth momentum.

Moreover, the company has been experiencing a surge in operating expenses due to ERP implementation in the United States and higher marketing expenses in relation to aggressive advertising and marketing strategies for strengthening brand value. The company anticipates marketing expense to be up on a year-over-year basis. Also, capital expenses associated with the ERP project remain a hindrance. Till the benefits of ERP materialize, the company expects to incur higher capital expenses that might exert pressure on margins.

On the positive side, strong prospects of global e-commerce business, Shipping business and Digital Commerce Solutions are expected to be mitigate some of these headwinds for Pitney Bowes in the long haul.

Stocks to Consider

Some better-ranked stocks from the same space are Axcelis Technologies, Inc. ACLS and Applied Materials, Inc. AMAT. Both Axcelis Technologies and Applied Materials sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Axcelis Technologies has surpassed estimates in three of the trailing four quarters, with average positive earnings surprise of 35.3%.

Applied Materials has outpaced estimates in the preceding four quarters, with average earnings surprise of 2.7%.

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