NEW YORK (TheStreet) -- Infosys (INFY) shares are down -3.6% to $51.39 after being downgraded to "sell" from "buy" by analysts at UBS AG (UBS) on Wednesday.
The firm cut the company's price target by -32% down to $45.77 from $67.44.
Analysts at UBS believe that the firm is not as well positioned to take advantage of the future growth opportunities in the IT sector as its competitors and cites a high attrition rate as reasons for the downgrade.
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Separately, TheStreet Ratings team rates INFOSYS LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate INFOSYS LTD (INFY) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 7.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- INFY has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.40, which clearly demonstrates the ability to cover short-term cash needs.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.35% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, INFY should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- INFOSYS LTD has improved earnings per share by 9.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, INFOSYS LTD increased its bottom line by earning $3.06 versus $3.02 in the prior year. This year, the market expects an improvement in earnings ($3.26 versus $3.06).
- The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 9.7% when compared to the same quarter one year prior, going from $444.00 million to $487.00 million.
- You can view the full analysis from the report here: INFY Ratings Report