Infosys Shares Hit 52-Week High - Analyst Blog

By Zacks Equity Research,

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On Feb 28, shares of  Infosys Ltd. ( INFY ) hit a new 52-week high of $62.13 per share. The momentum in the share price was driven by the recent development at its subsidiary Infosys BPO which revealed its novel Process Progression Model (PPM) designed to enhance their client experience. Shares gained almost 16.3% over the 1-year period.

PPM is a unique framework intended to optimize the clients business by integrating skilled personnel, stringent risk vigilance and an efficient automation process. The framework is adept in outlining the plan for business improvement while also matching the progress with the client's requirements. This new model is expected to leverage the business processes while improving the company's service going forward.

With respect to earnings performance, Infosys delivered positive earnings surprises in all of last four quarters with an average beat of 5.9%. The solid performance of the company is largely fueled by its differentiating strategy to capture potential opportunities and its strategic organizational changes.

Earlier on Jan 10, Infosys reported third-quarter fiscal 2014 earnings per ADS from continuing operations of 81 cents per share, surpassing the Zacks Consensus Estimate of 75 cents by 8.0%.

This Zacks Rank #2 (Buy) company has been witnessing volume growth, client additions, a number of large deal wins along with an increased sales momentum in its big data and cloud offerings. In the last quarter, the company reported higher revenues across all its businesses.

After having witnessed continued decline in margins for about the past six quarters, Infosys reported increase in both its gross and operating margins during the third quarter of 2014. Gross margin for the quarter improved by 80 basis points while operating margin improved by 150 basis points, mainly on account of initiatives to increase efficiency in its operations.

Moreover, Infosys has a strong balance sheet and generates a substantial cash flow. In the last quarter, the company reported higher revenues across its businesses and regions.

Further, Infosys continues to strengthen its expertise and competency in Oracle Corp. ( ORCL ). During the last reported quarter, Gartner's International Retail Core Banking report placed Infosys 'Finacle' as the Leader in its Magic Quadrant for International Retail Core Banking for the consecutive seventh time.

The Zacks Consensus Estimate for earnings per share for 2014 is currently pegged at $3.02. The expected long-term earnings growth rate for the stock is 14.8%.

Estimate Revisions

Over the last 7 days, earnings estimates for Infosys did not show any upward or downward revision for 2013. Although there is a lacuna of estimate revisions, we envision an uptrend for the stock, backed by its strong growth potential.

Other Stocks to Consider

Some other stocks in the industry having similar Zacks Rank are Amdocs Ltd ( DOX ) and GTT Communications, Inc. ( GTT ).

AMDOCS LTD (DOX): Free Stock Analysis Report

GTT COMMUNICATN (GTT): Free Stock Analysis Report

INFOSYS LTD (INFY): Free Stock Analysis Report

ORACLE CORP (ORCL): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: DOX , GTT , INFY , ORCL

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