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On Friday, UBS analyst Shaleen Kumar adjusted the price target for Infosys (NSE:INFY) Ltd. (INFO:IN) (NYSE: INFY), a global leader in next-generation digital services and consulting, to INR1,850 from the previous INR2,100, while still endorsing the stock with a Buy rating. This revision follows Infosys’ financial performance report, which mirrored the previous year’s pattern of a weak quarter and unimpressive guidance. With a market capitalization of $68.88 billion and current trading price of $16.14, InvestingPro data shows the stock has declined 26.37% year-to-date, potentially creating an attractive entry point for value investors.
Infosys concluded the fiscal year 2025 with results that did not stray far from its fiscal year 2024 performance, marked by a soft final quarter and cautious future outlook. The company’s ability to replicate the success seen in fiscal year 2025, where it reported three consecutive quarters of earnings beats and raised guidance, is now under scrutiny. The firm faces the challenge of not having a ramp-up in large deals and is dealing with greater macroeconomic uncertainty compared to 2024. Despite these challenges, InvestingPro analysis reveals strong fundamentals with revenue of $19.11 billion and a healthy 3.02% growth rate. For deeper insights into Infosys’s financial health and growth prospects, subscribers can access the comprehensive Pro Research Report, which provides detailed analysis of what really matters for this IT services leader.
Despite these challenges, Infosys has favorable factors such as a higher proportion of smaller deals and the carryover of revenue from the fourth quarter to the first quarter, which could support growth in FY26E (Fiscal Year 2026 Estimate). The company is also expected to benefit from a generally lower pass-through in FY26, which could improve margins. Management has provided guidance for organic revenue growth of 0-3% year-over-year in constant currency, which translates to a compound quarterly growth rate of approximately 1.8-1.9% on the higher end. This target, according to the management, is ambitious but achievable, as there have been no significant project cancellations or deferrals.
Furthermore, Infosys’ acquisition of two companies is anticipated to contribute an additional 40-50 basis points to the growth forecast for FY26E. While the lowered price target reflects the softer fourth quarter and subdued guidance, UBS maintains a Buy rating on Infosys shares. The rationale behind this stance is that the potential for further downside is limited and the current stock valuations, which are in line with a 10-year average, offer a solid margin of safety. InvestingPro analysis indicates the stock is currently undervalued, trading at a P/E ratio of 20.68, with analysts seeing up to 27% upside potential. The company maintains an impressive Financial Health Score of 3.16 (GREAT), supported by strong cash flows and moderate debt levels.
In other recent news, Infosys has been in the spotlight with several analyst updates. Stifel adjusted its price target for Infosys shares to $18.00 from $22.00, maintaining a Hold rating. This change precedes the company’s upcoming fourth-quarter fiscal year 2025 report and reflects revised revenue growth projections influenced by current demand trends. Meanwhile, Jefferies also lowered its price target for Infosys to INR1,835.00 but maintained a Buy rating, citing concerns over the US macroeconomic environment. Despite these concerns, Jefferies remains optimistic about Infosys’ potential, highlighting improved free cash flow and higher payouts.
Morgan Stanley (NYSE:MS) downgraded Infosys from Overweight to Equalweight, reducing the price target to INR1,740.00 due to a weaker growth outlook and concerns about discretionary spending. In contrast, CLSA upgraded Infosys to Outperform, keeping a price target of INR1,978.00, based on a stable demand outlook and strong cyclical tailwinds. CLSA expressed confidence in Infosys’ capabilities in SaaS implementations and its integration with the Nvidia (NASDAQ:NVDA) ecosystem.
Elsewhere, Jefferies downgraded Wipro (NYSE:WIT) to Underperform, citing limited growth prospects and adverse foreign exchange movements. Despite this, Jefferies continues to favor Infosys, Coforge, and Sagility as top picks within the sector. These updates highlight the varied perspectives on Infosys’ growth potential amid current market conditions.
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