Oppenheimer Maintains Perform On Infosys As Shares Appear Reasonably Valued

In a research note released Monday, Oppenheimer analyst Glenn Greene maintained a Perform rating on Infosys (NYSE:INFY), as the company reported 2Q:FY15 results with revenue increasing 3.1% Q/Q (3.9% in constant currency) to $2.20B. EPS of $0.89 beat Oppenheimer’s expectations driven by operating margins of 26.1%. No price target was given.

Greene noted, “While we are encouraged by his strategic vision, near-term growth and profitability implications remain unclear.” He added, “We raise our FY15E EPS to $3.48 (from $3.42) and FY16E EPS to $3.71 (from $3.63) to reflect quarterly results and recent margin trajectory. Our FY15E EPS reflects 7.5% revenue growth (vs. guidance of 7-9%) and 120bps of margin expansion to 25.2%. Our FY16E reflects ~8% revenue growth and modest margin contraction.”

The analyst concluded, “INFY realized a solid revenue quarter with healthy margin performance. We are intrigued by Sikka’s strategic vision although INFY appears in the early stages of broad change. Trading at ~17.5x our CY15E EPS, the shares appear reasonably valued, in our view.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Glenn Greene has a total average return of 19.0% and a 82.1% success rate. Greene is ranked #170 out of 3340 analysts.

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