These are top 10 stocks traded on the Robinhood UK platform in July
On Tuesday, CFRA analyst Hazim Bahari revised the price target for Wipro Ltd. (NYSE:WIT) shares, bringing it down from $4.00 to $3.50, while keeping a Hold rating on the stock. The adjustment was made to reflect a valuation of 24 times the projected earnings per share (EPS) for the fiscal year ending in March 2026 (FY26), which is above Wipro's five-year average price-to-earnings (P/E) ratio of 21 times.
Currently trading at a P/E ratio of 25.13x, InvestingPro data indicates the stock is slightly overvalued relative to its Fair Value. This valuation accounts for an anticipated uptick in EPS growth through FY26.
Wipro's financial performance for the third quarter of FY25 was stronger than anticipated, with a year-over-year increase of 24% in net profit, amounting to INR 33.5 billion. This rise occurred despite a modest revenue growth of 5% year-over-year, totaling INR 233.8 billion. The company's operating margin reached a peak for the past 12 quarters at 17.5%, which is a 1.5% improvement from the previous year.
InvestingPro data shows strong financial health with a 30.23% gross profit margin and robust liquidity, maintaining a current ratio of 2.83. According to Bahari, this was primarily due to reductions in general and administrative costs and an increase in offshore revenue, which were slightly offset by a minor decrease in net utilization.
Management at Wipro has indicated that they do not expect further increases in operating margins, maintaining a target of 17.5%. In terms of deal bookings, the company reported $3.5 billion, which represents a 7% decline year-over-year but is consistent with the previous quarter. Bahari views this performance as respectable given the current lack of demand growth in the industry.
In light of the recent financial results and margin improvements, CFRA has raised its EPS forecasts for Wipro. The new projections are set at INR 12.25 for FY25, up from the previous estimate of INR 11.13, and INR 13.04 for FY26, an increase from the earlier forecast of INR 12.33. These updated EPS estimates are largely based on better-than-expected margin assumptions.
In other recent news, Wipro Ltd (NSE:WIPR). has been the subject of several analyst revisions. UBS recently upgraded Wipro shares from Neutral to Buy, following a strong 3Q performance that saw a 12-quarter peak in EBIT margin at 17.5%. This performance was reflected in a robust revenue of $10.47 billion and a healthy gross profit margin of 31.4%. UBS analyst Shaleen Kumar anticipates potential margin upside due to factors like operating leverage, favorable foreign exchange trends, and a boost in consulting services.
Meanwhile, Morgan Stanley (NYSE:MS) maintained its Underweight rating on Wipro, noting that the company's utilization levels are nearing their peak. Despite this, Wipro had a strong performance in 2024, surpassing the Nifty IT index with a 26% gain. The firm also expects Wipro to issue improved sequential growth guidance for the fourth quarter, albeit still falling short of larger-cap peers' forecasts.
CFRA also weighed in, maintaining its Hold rating on Wipro but adjusting the stock's price target multiple times. The firm first raised the target to $7.00, aligning with the company's peers based on a forward multiple for the fiscal year ending March 2026. Later, CFRA lowered the target to $4.00 in response to Wipro's 1-for-1 bonus issuance, reflecting updated earnings per share estimates for the fiscal years 2025 and 2026. Despite the stock's current trading at above-average P/E ratios and the absence of significant positive catalysts, CFRA's stance remains neutral.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.