Infosys (INFY) delivered solid Fiscal 2022 Q2 results for the period ended September 30, 2021, driven by broad-based growth across geographies and segments. Additionally, the company has raised its revenue guidance for FY22, affirming the strength of its digital offerings. INFY shares rose 3.52% to close at $22.65 on October 13.
Together with its subsidiaries, Infosys offers consulting technology and next-generation digital services in North America, Europe, and India. It bills itself as a leader in next-generation digital services and consulting.
Fiscal Q2 revenue was up 19.4% year-over-year and up 6.3% quarter-over-quarter to $3.998 billion, beating consensus estimates of $3.91 billion. The increase was driven by a 42.4% year-over-year jump in digital revenues.
Basic earnings per ADR landed at $0.17, representing a 13% year-over-year increase, in line with consensus estimates. Operating margins in the quarter stood at 23.6%, a 1.8% year-over-year decline. (See Top Smart Score Stocks on TipRanks)
According to CEO Salil Parekh, the stellar Fiscal Q2 performance and robust growth outlook affirm the company’s strategic focus on digital offerings. Investments into expanding its capabilities, such as differentiated cloud play, and Infosys Cobalt, should allow Infosys to profit as global enterprises accelerate their digital journeys. Consequently, management has raised its revenue growth guidance for FY 2022 to 16.5% – 17.5%.
In the second quarter, Infosys repurchased its stock, reducing its share capital by 1.31%. To date, the company has returned 82% of its free cash flow through dividends and buybacks.
Recently Robert W. Baird analyst David Koning reiterated a Sell rating on the stock with a $20 price target, implying 11.70% downside potential to current levels.
Consensus among analysts is a Hold based on 4 Holds and 1 Sell. The average Infosys price target of $21.25 implies 6.18% downside potential to current levels.