On Monday, Goldman Sachs updated its outlook on shares of Infosys (NS:INFY) Ltd. (INFO:IN) (NYSE: INFY), increasing the price target to INR1,680.00 from INR1,650.00. The firm maintained a Buy rating on the shares of the global consulting and IT services major. The revision reflects a more optimistic stance regarding the company's future revenue growth prospects.
The adjustment comes amid Infosys's recent challenges with revenue. Despite these difficulties, Goldman Sachs anticipates an improvement, projecting a revenue growth of 4% for the fiscal year 2025, which surpasses the company's own forecast of 1%-3%. This expectation is underpinned by strong deal wins that are likely to escalate in the near future.
Goldman Sachs also noted that Infosys's stock is currently trading at roughly a 4% discount compared to the broader sector. Still, the firm expects this gap to close as the demand for Infosys's services recovers. This optimism is set against a backdrop where valuations have been rolled forward by three months, despite a slight downward revision of revenue and EPS estimates for the fiscal years 2025 to 2027 by up to 1%.
The updated price target also translates to an American Depositary Receipt (ADR) price of $20.1, a slight increase from the previous target of $19.8. The new target and the maintained Buy rating suggest that Goldman Sachs sees a favorable outlook for Infosys, with expectations of performance improvement and narrowing valuation discounts in relation to the sector.
In other recent news, Infosys Limited, the global consulting and IT services corporation, has been active in making strategic moves and addressing regulatory matters. The company announced a settlement with the Securities and Exchange Board of India (SEBI), pertaining to an undisclosed issue involving CEO Mr. Salil Parekh.
While the specifics of the settlement were not revealed, it represents a significant development in Infosys' ongoing efforts to strengthen its governance and compliance frameworks.
Infosys has also been expanding its strategic partnerships. Recently, the company announced a new collaboration, the details of which were not disclosed. This step aligns with Infosys' ongoing efforts to enhance its service portfolio and deliver innovative solutions to its global clientele.
Moreover, Infosys expanded its existing partnership with Liberty Global (NASDAQ:LBTYA), aiming to enhance digital entertainment experiences through the integration of artificial intelligence.
The company also provided updates on its financial performance for the quarter ended June 30, 2023. While specific figures regarding revenue, profit, or growth were not provided, the financial results were disclosed in accordance with International Financial Reporting Standards (IFRS) and Indian Accounting Standards (Ind-AS). These recent developments highlight Infosys' commitment to maintaining transparency with its investors and the public.
InvestingPro Insights
As investors consider Goldman Sachs' optimistic outlook on Infosys Ltd. (INFY), current data from InvestingPro provides a comprehensive picture of the company's financial health and market performance. Infosys boasts a substantial market capitalization of $78.93 billion, reflecting its significant presence in the IT services sector.
While the company trades at a high Price/Earnings (P/E) ratio of 24.97, indicating a premium valuation relative to near-term earnings growth, its stable dividend growth history is noteworthy. Infosys has successfully raised its dividend for three consecutive years and has maintained dividend payments for 25 consecutive years, signaling a strong commitment to shareholder returns.
InvestingPro data also highlights a modest revenue growth of 1.92% over the last twelve months as of Q4 2024, with a solid gross profit margin of 29.45%. These figures suggest efficient operations and a robust business model. Moreover, Infosys's low price volatility aligns with Goldman Sachs' view on the stock's potential for a steady upward trajectory in the market.
To delve deeper into Infosys's performance and gain further insights, consider exploring additional InvestingPro Tips. There are 14 more tips available, which could provide valuable guidance for your investment decisions. For those interested in a subscription, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a wealth of expert analysis and real-time data.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.