Infosys Continues to Gain Share and Inches Revenue Forecasts Upward; Raising FVE to $18

Infosys continued the trend Tata Consultancy Services’ earnings started earlier this week: overall pleasing fiscal third-quarter results despite a tough economic environment. We were pleased to see that Infosys is continuing to take share in the IT services market amid a backdrop of vendor consolidation and is increasing digital revenue substantially. While the firm continues to be affected by currency headwinds and delayed decision-making, we believe that Infosys’ long-term potential remains strong, as evidenced by posting the greatest number of large deals in Infosys’ history, in the quarter. Moreover, we were pleased that 36% of total contract value in the quarter was net new. Altogether, we are raising our fair value estimate of narrow-moat Infosys shares to $18 from $17 per share, which leaves shares fairly valued.