On Friday, Infosys (NS:INFY) Ltd. (INFO:IN) (NYSE: INFY) shares experienced a positive shift in market sentiment as Jefferies, a global investment banking firm, increased its price target on the company's shares. The new price target is set at INR2,040.00, up from the previous INR1,630.00, while the firm continues to endorse a Buy rating on the stock.
The upgrade comes in the wake of Infosys' first-quarter results, which surpassed expectations with a robust revenue growth of 3.6% quarter-over-quarter in constant currency terms. The company has also adjusted its FY25 growth guidance upward to 3-4% year-over-year in constant currency, a move seen as cautious despite its significant deal wins.
The analyst noted that the financial services sector is showing initial signs of recovery, and coupled with strong deal wins and an overall enhancement in operating performance, it suggests that Infosys may have overcome its most challenging period. Based on these factors, Jefferies has raised its earnings estimates for Infosys by 3-4%.
Projected earnings for Infosys are expected to see a compound annual growth rate (CAGR) of 10% from FY24 through FY27. The maintained Buy rating and the revised price target reflect confidence in the company's future performance and its ability to sustain growth in the coming years.
In other recent news, Infosys Ltd. has seen its share target raised by several firms following a strong Q1 performance. BofA Securities, Morgan Stanley, Goldman Sachs, CLSA, and Kotak all increased their price targets, citing robust revenue growth, strong deal wins, and an improved outlook in the financial services sector. Infosys reported a quarterly revenue growth of 3.6% and an Earnings Before Interest and Taxes (EBIT) margin of 21.1%.
The company's success in securing significant contracts, particularly in the Banking, Financial Services, and Insurance (BFSI) sector, led to an upward revision in its FY2025 growth guidance to 3-4%. Analysts from Goldman Sachs, CLSA, and Kotak have accordingly adjusted their Earnings Per Share (EPS) estimates upwards for fiscal years 2025-2027.
Infosys also announced a strategic partnership with Sector Alarm (NASDAQ:ALRM) to modernize the latter's enterprise systems using cloud technology. Additionally, Infosys' CEO, Mr. Salil Parekh, reached a settlement with the Securities and Exchange Board of India, though the specifics of the settlement remain undisclosed. These are among the latest developments in the company's growth trajectory and strategic initiatives.
InvestingPro Insights
As Infosys Ltd. (NYSE: INFY) garners a favorable outlook from Jefferies with an increased price target, real-time data from InvestingPro further enriches the narrative surrounding the company's financial health and market position. Infosys boasts a considerable market capitalization of $89.48 billion, underpinning its significant presence in the IT services sector. While the P/E ratio stands at 28.23, reflecting a premium valuation, the company's revenue for the last twelve months as of Q4 2023 is reported at $18.56 billion, with a steady revenue growth of 1.92%.
InvestingPro Tips highlight that Infosys has raised its dividend for 3 consecutive years and has maintained dividend payments for 25 consecutive years, showcasing its commitment to returning value to shareholders. Additionally, the company's strong performance is evident with a robust return on assets of 19.91% for the same period. It's worth noting that while analysts have revised their earnings downwards for the upcoming period, Infosys continues to operate with a moderate level of debt and its liquid assets exceed short-term obligations, suggesting financial stability.
For readers interested in a deeper dive into Infosys' financials and additional InvestingPro Tips, which include insights on the company's trading patterns and industry standing, visit Investing.com/pro/INFY. There are 18 additional tips available on InvestingPro to help investors make informed decisions. To access these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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