Jefferies downgrades WNS stock to Hold after Capgemini acquisition deal

Investing.com - WNS Limited (NYSE:WNS) stock rating was downgraded by Jefferies from Buy to Hold with a price target of $76.50, reduced from the previous $80.00. The stock has shown remarkable momentum, gaining over 67% in the past six months and currently trades near its 52-week high of $74.84, according to InvestingPro data.

The rating change follows WNS’s agreement to be acquired by IT services firm Capgemini (EPA:CAP) for $76.50 per share, representing a 27% premium to WNS’s average stock price over the last 30 days.

The acquisition price equates to approximately 16.5 times forward price-to-earnings ratio, according to Jefferies’ analysis of the transaction.

Jefferies indicated the purchase price is close to its previous target price of $80.00 and represents "a fair outcome for investors given the continued significant debate about the impact of AI on the industry."

The firm noted that a competitive bid for WNS is unlikely, supporting its decision to downgrade the stock to a Hold rating.

In other recent news, Capgemini announced a definitive agreement to acquire WNS Holdings for $76.50 per share, totaling $3.3 billion in cash. This acquisition has received unanimous approval from the boards of both companies and is expected to close by the end of 2025, pending regulatory approvals. WNS has reported strong financial performance, achieving approximately 9% constant currency revenue growth over the past three fiscal years, with revenue reaching $1.27 billion for fiscal year 2025 and an 18.7% operating margin. The merger aims to create a global leader in AI-powered Intelligent Operations, combining Capgemini’s technology capabilities with WNS’s digital business process expertise. William Blair downgraded WNS from Outperform to Market Perform, citing the strategic fit of the merger as a factor. Additionally, WNS announced the extension of Non-Executive Director Françoise Gri’s term for an additional year, reflecting the board’s confidence in her contributions. In the broader sector, Stifel analysts maintained their outlook on the Information and Financial Technology Services sector despite mixed revenue growth reports. Meanwhile, Capgemini plans to finance the acquisition through a mix of cash and debt issuance, supported by secured bridge financing.

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