BofA Securities launched coverage of Pitney Bowes Inc. (NYSE: PBI) with an underperform rating and established a $9.00 price target, the firm said Monday. That target sits below the stock's most recent trading level of $10.09, indicating potential downside from current market prices.
The research note highlighted a number of tensions within Pitney Bowes' recovery. BofA pointed to structural headwinds in the company’s core mailing operations and warned of risk to pricing and volume growth through the course of the turnaround. Those concerns underpinned the cautious view and the below-market price objective.
At the same time, Pitney Bowes has taken visible steps to reshape its business and improve margins. Following its 2024 divestiture of Global Ecommerce, the company has simplified its portfolio and tightened cost controls, delivering more than $200 million in cost savings, according to the firm. Those efforts have helped sustain robust gross profit margins, which currently measure 53.78%.
BofA's report also emphasized the role of Presort within the company’s cash generation profile. The Presort business remains a meaningful cash engine that has supported sizeable cash-funded share repurchases, the bank said. However, the note warned that leverage and potential downside to operating earnings after large-scale expense reductions could constrain future shareholder returns. The firm argued that repurchases have been a primary driver of reported earnings growth to date, and that limits on returns may follow from the company's capital and earnings dynamics.
In personnel developments, Pitney Bowes named Steve Fischer as president of The Pitney Bowes Bank. Fischer's background includes leadership roles such as CEO of TIAA Bank and Vice Chairman of EverBank Financial Corporation, positions cited in company announcements.
Other analysts have also begun coverage or refreshed their views. Truist Securities initiated coverage with a Hold rating and noted progress under CEO Kurt Wolf in steering the company's turnaround. Separately, Citizens started coverage with a Market Outperform rating, pointing to what it described as attractive valuation characteristics. These divergent assessments underscore differing opinions among analysts about the company's prospects and valuation going forward.
InvestingPro data referenced by market platforms suggests Pitney Bowes may be slightly undervalued under its proprietary Fair Value model, a contrast to BofA's more cautious outlook. The range of views highlights the balance between operational improvements and ongoing structural pressures in the mailing segment as investors and analysts assess the company's path ahead.
Implications for markets: The debate over Pitney Bowes centers on mail-related revenue durability and capital allocation - issues that have implications for mailing and logistics services as well as for investors tracking financial returns tied to buybacks and margin recovery.