Tuesday, Genpact Ltd . (NYSE:G) received an optimistic update from Jefferies, as the firm raised the company's stock rating from Hold to Buy. Accompanying the upgrade, Jefferies also increased its price target on Genpact shares to $55.00, up from the previous $44.00. This upgrade aligns with InvestingPro analysis, which indicates the stock is currently undervalued, trading at an attractive P/E ratio of 12.2x.
The upgrade comes with a positive outlook on Genpact's future performance, particularly in its Data-Tech-AI and Digital Operations segments. Jefferies expects these areas to show significant growth in the coming years.
According to the research firm, the growth rates for these segments have reached their lowest point and are poised to accelerate in the medium-term. InvestingPro data supports this optimistic outlook, showing a "GREAT" overall financial health score and strong momentum with a 36.6% price return over the past six months.
Jefferies projects that Genpact's Data-Tech-AI segment, which accounts for 47% of the company's revenues, will exit 2024 with revenues growing at a high single-digit pace. This marks an increase from the low single-digit growth observed a year earlier. The firm anticipates that this growth rate will be sustained during the first half of 2025 and will then begin to climb higher in the second half of the year. Current revenue growth stands at 5.2%, with total revenue reaching $4.7 billion in the last twelve months.
Looking further ahead, Jefferies forecasts that as discretionary spending and AI tailwinds gain momentum, Genpact's growth rate in these key segments will further accelerate. The firm predicts a shift to a low double-digit growth pace in 2026 and 2027, indicating a robust outlook for the company's financial performance and potential for earnings appreciation and multiple expansion. For deeper insights into Genpact's growth potential and comprehensive analysis, access the full Pro Research Report available on InvestingPro.
In other recent news, Genpact reported a 7% rise in revenue to $1.21 billion in the third quarter, driven by a 9% increase in Data-Tech-AI and a 5% uptick in Digital Operations. In response to these strong results, the company has raised its full-year revenue and EPS guidance to approximately $4.740 billion to $4.751 billion and $3.24 respectively.
Additionally, Genpact announced a strategic collaboration with Amazon (NASDAQ:AMZN) Web Services (AWS) aimed at promoting the adoption of AI across various business functions. The partnership seeks to integrate AI technology into diverse business lines, offering industry-specific solutions and fostering innovation.
In analyst reviews, TD Cowen maintained a Hold rating on Genpact shares, suggesting the company's internal changes could potentially drive results that exceed expectations. Mizuho (NYSE:MFG), on the other hand, increased its stock price target for Genpact to $45.00, up from $40.00, while maintaining a neutral stance.
Furthermore, Genpact recently appointed Jinsook Han as its new Chief Strategy and Corporate Development Officer. Han will be in charge of the company's strategic planning and growth initiatives. This news, along with the other recent developments, reflects Genpact's ongoing efforts to enhance its performance and position in the market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.