Infosys Earnings: Tapering Our Fair Value Estimate to $17 Per Share Upon Steep and Weak Outlook

Infosys’ fourth-quarter results came in under our expectations as the company experienced unforeseen winding down of client projects. While the near-term weakness is occurring throughout the industry, we were caught off guard by Infosys’ significantly lower 2024 guidance than we were expecting. While peer Tata Consultancy Services, or TCS, refrained from giving an outlook on April 12, that is the norm for the company, and we sensed overall optimism ahead with a sense of general near-term moderation rather than sharp declines. In contrast, Infosys’ outlook for the year indicates significantly steeper conservatism, which we think has weight given Infosys’ fourth-quarter performance compared with TCS. As a result, we are lowering our fair value estimate for the narrow-moat firm to $17 from $18 per share. Shares are down 8% upon results to near $16 per share, which leaves the stock fairly valued.