Market News

Infosys Shares Up on Revenue and Earnings Results

Shares of digital services provider Infosys (INFY) closed 1.62% higher on Wednesday after the company reported strong first-quarter fiscal 2022 results.

Quarterly earnings stood at $0.17 per share, up from $0.13 reported in the year-ago quarter. EPS matched the Street’s estimates. (See Infosys stock chart on TipRanks)

Net revenue came in at $3.78 billion and surpassed analysts’ expectations of $3.69 billion. Moreover, the figure compares favorably with the $3.12 billion reported in the same quarter last year.

Revenues from the Digital segment increased 46.9% year-over-year on a reported basis to $2.04 billion, whereas revenues from the Core segment rose 0.6% on a reported basis to $1.74 billion. Notably, Digital revenues constituted 53.9% of total revenues during the quarter.

Buoyed by its strong quarterly performance, Infosys raised its guidance for the fiscal year 2022. It now expects annual revenues to grow between 14% and 16%, whereas earlier it expected a 12% to 14% year over year growth at constant currency.  The company reiterated its outlook for the fiscal year 2022 operating margin of 22%-24%.

Salil Parekh, CEO and MD of Infosys, said, “I am proud of our employees, who as ‘One Infosys’ demonstrate resilience and commitment in delivering for our clients. This gives us the confidence to increase our revenue growth guidance to 14%-16%.”

He added, “As Infosys completes forty remarkable years, its continuing success and global impact are a testament to the vision of the founders and all the leaders who have shaped the company.”

Following the earnings announcement, Cowen & Co. analyst Bryan Bergin reiterated a Hold rating on the stock, while raising the price target to $21 from $19, implying a 1.8% downside potential to current levels.

Bergin says, “Broad-based momentum & the timing of large deal signings supported a 200 bps raise to INFY’s FY22 growth outlook. From 2Q forward, INFY benefits from the ramping of FY21 large deals, although the likely magnitude of beat & raise outperformance is apt to be more difficult. Double-digit growth through FY22 on strengthened services demand and good execution supports its current premium.”

Consensus among analysts is a Hold based on 1 Buy and 3 Holds. The average Infosys price target of $21.33 implies 0.3% downside potential to current levels.

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