Infosys Earnings: Clients Cut Discretionary Projects Amid Macro Headwinds; Lowering Our Fair Value

Narrow-moat Infosys reported first-quarter earnings below our expectations. Management offered a grimmer outlook for 2024 revenue growth, citing clients’ revision of discretionary spending and delayed megadeal closings. Despite clients’ continued willingness to collaborate with Infosys on cost- and efficiency-improvement programs, we are lowering our fair value estimate from $17 to $16 per share after baking in a weaker near term. After the announcement, shares dropped over 9% to $16 per share, leaving the stocks trading in fair-value territory, in our view.