2023-06-26 03:57:41 ET
Infosys ( NYSE: INFY ) stock price has underperformed Accenture and Wipro as concerns about the company’s growth remains. The stock has dropped by more than 12% this year while Accenture has jumped by over 11% this year.
Demand concerns remain
Infosys is a leading IT consulting company valued at over $63 billion. The company, which is dual-listed in India and the US, provides sophisticated services to some of the biggest companies in the world.
For example, its Finnacle software suite provides core banking solutions to hundreds of banks internationally. On Monday, Infosys announced that it will be the main consultant for Danske Bank, the biggest bank in Denmark. As part of this deal, Infosys willl acquire the bank’s IT center in India that has over 1,400 employees.
The other important news in the industry came last week when Accenture published its financial results. Its revenue jumped to $16.56 billion in the quarter while its earnings per share jumped to $31.15. The two figures were higher than what most analysts were expecting, as we wrote here .
Meanwhile, Infosys and other IT consulting companies are seeing more demand from companies implementing generative artificial intelligence in their operations. In a statement to WSJ, the company’s Chief Information Officer (CIO) said :
“Most of them are looking at using generative AI to significantly improve customer service, help desk service, software engineering, business and IT operations.”
Still, for Infosys, there is concern about whether these investments will translate to numbers. The most recent quarter showed that the company’s growth had slowed, leading to downgrades by analysts at Citigroup and Nomura.
Infosys’s revenue came in at $4.58 billion in its fourth quarter while its EPS was $0.18. The two figures were lower than what analysts were expecting. Its margins came in at 21%, which was a 50 basis points decline from the previous quarter.
Infosys share price forecast
The daily chart shows that the INFY stock price has been in a strong bearish trend in the past few months. It moved below the important support level at $16.07, the lowest level on September 23rd. The stock retreated below the 50-day and 25-day moving averages.
Meanwhile, the shares have formed an ascending rectangle pattern that is shown in blue. The price is sitting at the lower side of this channel. Therefore, there is a likelihood that the stock will have a bearish breakout as sellers target the year-to-date low of $14.54.
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