On Friday, Investec maintained its Sell rating on Infosys (NS:INFY) Ltd. (INFO:IN) (NYSE: INFY) stock but lowered the price target to INR1,700.00 from INR1,720.00. The adjustment follows Infosys' first-half financial performance for fiscal year 2025, which, according to the firm, led its peers due to a robust deal backlog and relatively fewer revenue headwinds compared to the previous year.
In the second quarter of FY25, Infosys exhibited a quarter-over-quarter growth of 3.1% in constant currency and 3.8% in U.S. dollar terms, aligning with estimates. However, the company's earnings before interest and taxes (EBIT) percentage fell short of expectations by 30 basis points. Looking ahead to the second half of FY25, Infosys has updated its revenue growth guidance to range between 3.75% and 4.5%, which translates to a potential -0.5% to +0.7% sequential quarterly growth rate.
Investec's analyst noted that there seem to be no significant catalysts entering the second half of the fiscal year that could enhance the stock's performance. The firm also revised its earnings per share (EPS) forecasts for Infosys for the fiscal years 2025, 2026, and 2027, decreasing them by 1.4%, 1.5%, and 1.1%, respectively. The reiteration of the Sell rating indicates Investec's cautious stance on the stock's near-term prospects.
The price target reduction reflects a tempered outlook for Infosys, despite the company's solid H1FY25 performance. Investors will be watching closely as the company navigates the forecasted growth in the coming quarters, with the market taking note of Investec's conservative position on the stock's potential.
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