Infosys (INFY) to Acquire oddity, Boost Digital Portfolio

Infosys INFY recently announced that it has signed a definitive agreement to acquire the Germany-based digital communication and commerce agency — oddity. However, the financial terms of the deal have been kept under wraps.

With this buyout, the Indian IT services provider intends to strengthen digital marketing skills and aid in navigating digital transformation for its clients globally. Infosys will reinforce its creative, branding and experience design capabilities through this move.

Founded in 2000, oddity is one of the largest independent digital agencies in Germany. It has over 300 digital specialists located in Stuttgart, Berlin, Cologne, Belgrade, Taipei, and Shanghai. The agency’s comprehensive service suite includes digital-first brand management and communication, in-house production (virtual and augmented reality), experience design and e-commerce services across Europe and China.
 

Infosys Limited Price and Consensus

Infosys Limited price-consensus-chart | Infosys Limited Quote

The buyout will be a strategic fit for the company as oddity’s product portfolio complements Infosys' existing digital portfolio. The agency will be part of Infosys’ US-based digital creative and consumer insights design studio, WONGDOODY, and provide digital experience and design offerings across the latter’s network of studios.

The buyout is anticipated to conclude in first-quarter fiscal 2023 (April 2022), subject to customary closing conditions.

Infosys has been reinforcing its digital-transformation capabilities to expand and solidify its position in the highly competitive environment. It enables its clients across over 45 countries to create and execute strategies for their digital transformation. Such efforts in the digital-transformation business will aid the company to compete with peers like Accenture and Cognizant.

Over the last few quarters, Infosys has collaborated with several bigwigs to fortify its portfolio and market share. In order to bolster digital, cloud, legacy modernization and automation business, Infosys forged strategic tie-ups with Archrock, Majesco, Britvic, ArcelorMittal, Google, Adobe, Microsoft, Amazon Web Services and salesforce.com. To drive engineering services, the company has partnered with General Electric to deliver solutions in the field of automation, digital trends and the Internet of Things.

However, Infosys is grappling with increasing anti-outsourcing sentiments in certain countries. Higher subcontractor costs, and the company’s compensation revision with a higher variable pay and incentives are weighing on margins. Currency volatility between the India rupee and the U.S. dollar remains a major concern.

Zacks Rank & Key Picks

Infosys currently carries a Zacks Rank #4 (Sell). Shares of INFY have jumped 32.5% in the past year.

Some better-ranked stocks from the broader computer and technology sector are Advanced Micro Devices AMD and Axcelis Technologies ACLS, both sporting a Zacks Rank #1 (Strong Buy), and Analog Devices ADI, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AMD’s first-quarter fiscal 2022 earnings has been revised upward by 23 cents to 91 cents per share over the past 60 days. For fiscal 2022, AMD’s earnings estimates have moved south by a penny to $3.99 per share in the past 30 days.

AMD’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 17%. Shares of AMD have gained 46.5% in the past year.

The Zacks Consensus Estimate for Axcelis’ first-quarter 2022 earnings has been revised by 5 cents upward to 92 cents per share over the past 60 days. For 2022, Axcelis’ earnings estimates have moved north by 12.4% to $3.99 per share in the past 60 days.

Axcelis’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 30.3%. Shares of ACLS have soared 124.7% in the past year.

The Zacks Consensus Estimate for Analog Devices’ second-quarter fiscal 2022 earnings has been revised upward by 23 cents to $2.08 per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 79 cents to $8.32 per share in the past 60 days.

Analog Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have increased 9.5% in the past year.

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