BofA Securities has adjusted its outlook on WNS Limited (NYSE: NYSE:WNS), reducing the price target to $57 from the previous $66, while keeping a Buy rating on the shares.
The reassessment came after the company reported a quarterly revenue decline, which fell short of BofA Securities' expectations.
WNS Limited's second-quarter revenue saw a decrease of 1.5% quarter-over-quarter and 5.2% year-over-year on a constant currency basis, a steeper drop than the 1% growth projected by BofA Securities.
The company attributed the decline primarily to ongoing volume reductions in the travel sector, weaker discretionary spending, and the loss of a significant healthcare client.
Despite these challenges, WNS Limited noted that excluding the effects of the healthcare client loss, revenue actually grew by more than 3% quarter-over-quarter. The company anticipates that the current downturn in travel volumes will persist into the second half of the year, but no further negative impact is expected in the healthcare segment from the third quarter forward.
In other recent news, WNS Holdings Limited reported its fiscal second quarter results, surpassing analyst expectations with adjusted earnings per share of $1.13 and revenue of $322.6 million.
However, the company revised its fiscal 2025 guidance, disappointing investors with adjusted earnings per share now expected to be between $4.13 and $4.35, short of the $4.51 consensus. Revenue for the fiscal year is forecasted to be between $1.25 billion and $1.296 billion, also missing analyst projections of $1.309 billion.
Following these recent developments, Citi lowered its price target on WNS stock to $55.00 but maintained its Buy rating. Despite the lowered guidance, Citi remains optimistic about WNS's potential, with over 20 opportunities in the pipeline that could represent more than $500 million in combined Annual Contract Value.
However, the firm emphasized that WNS will need to demonstrate effective execution in the upcoming quarters to realize this growth. The company ended the quarter with $221.5 million in cash and investments and $262.8 million in debt.
InvestingPro Insights
To provide additional context to WNS Limited's recent performance and BofA Securities' outlook, let's consider some real-time data from InvestingPro. Despite the recent challenges, WNS maintains a market capitalization of $2.37 billion, reflecting its significant presence in the business process management industry.
InvestingPro data shows that WNS's revenue for the last twelve months as of Q2 2025 stands at $1.31 billion, with a modest revenue growth of 2.07% over the same period. This aligns with the company's statement about growth when excluding the loss of a major healthcare client. The company's profitability is evident from its operating income margin of 13.77% and a P/E ratio of 19.58, which suggests that investors are still willing to pay a premium for WNS's earnings despite recent setbacks.
Two relevant InvestingPro Tips highlight that WNS operates with a moderate level of debt and that its liquid assets exceed short-term obligations. These factors could provide the company with financial flexibility as it navigates through the current challenges in the travel sector and works to expand its customer base.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide deeper insights into WNS's financial health and market position.
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