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Investing.com - Rothschild Redburn initiated coverage on Infosys (NYSE:INFY) with a Sell rating and a $12.00 price target on Wednesday. The IT services giant, currently valued at $69.5 billion, trades at a P/E ratio of 21.7, though InvestingPro analysis suggests the stock may be undervalued at current levels.
The research firm noted that while Infosys has a more favorable business mix than TCS, with 15% consulting and 7% BPO, positioning it for stronger growth than TCS and slightly below Accenture, its growth outlook remains modest. The company generated $19.5 billion in revenue over the last twelve months, with a 4.53% growth rate and maintaining strong financial health according to InvestingPro metrics.
Rothschild Redburn forecasts Infosys to achieve 2.5% constant currency growth for FY26, at the top end of the company’s own 0-3% guidance range, reflecting the current weaker macroeconomic environment.
The firm projects a compound growth rate of 3% for constant currency revenue and 2% for organic revenue between FY27 and FY30, significantly lower than the 8.9% constant currency and 8.4% organic growth rates recorded between FY12-20.
Rothschild Redburn considers consensus expectations for rapid growth acceleration in CY28-29 "unrealistic," citing Infosys having one of the highest proportions of offshored labor as a limiting factor.
In other recent news, Infosys reported second-quarter earnings that aligned with analyst expectations, with earnings per share reaching $0.19. The company exceeded revenue forecasts, achieving $4.94 billion compared to the anticipated $4.88 billion, reflecting a 3.8% year-over-year growth. Additionally, Infosys saw a sequential revenue increase of 2.6% in constant currency terms. Jefferies responded to Infosys’ strong first-quarter results by raising its price target to INR1,860, highlighting significant deal wins totaling $3.8 billion. Stifel also adjusted its price target for Infosys to $18.50, citing improved guidance and maintaining a Hold rating. Similarly, TD Cowen increased its price target to $18.00, noting the company’s better-than-expected performance and healthy bookings. Infosys has also entered a strategic collaboration with German energy company RWE to enhance operational efficiency through automated digital workplace solutions. This partnership will utilize Infosys Workplace Suite to streamline processes and offer self-service options for RWE employees.
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