BofA Sees Infosys Turning the Corner, Raises to Buy Rating
Apparently the business of IT-outsourcing to India has already hit its trough. The firm is upgrading shares of Infosys Ltd. (NASDAQ: INFY) after its shares have underperformed the broader market by 20%. In theĀ local market trading (rather than theĀ ADRs), BofA…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
BofA sees a localĀ price target objective of Rs3,200 (vs. Rs2,450) with a 6% to 7% earnings upgrade in 2014 and 2015. The call is also rerating the stock from a one-year forward target PE of 14-times up to 16-times and is narrowing the P/E discount. The firmās interactions with senior management and in its channel checks look to remedy gaps in the services portfolio.
The upgrade also sees Infosys as a key beneficiary of any pick up in discretionary IT spending as business confidence returns and ticks up. It also expects in-line second quarter commentary to show an improving deal traction as a trigger for the stock. In short, this is a revenue recovery story against a depressed valuation.
We would advise that Infosys shares have already recovered handily off the summer and post-warning lows that took the ADRs in New York trading down from just over $55 down to under $38 as the ADR is now up around $48.00.
Infosys shares are still down about $0.10 at $48.05 so far today in the ADRs aginst a 52-week range of $37.93 to $61.48.
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
