Barclays maintains ‘overweight’ rating on Infosys stock

Barclays maintains ‘overweight’ rating on Infosys stock Despite Infosys' weak revenue forecast, Barclays maintained its rating for the software service provider's stock at 'overweight,' saying the company remained focused on revenue growth in the long term.

Barclays said it reduced its U. S. dollar revenue growth rates by 0.5 per cent to 4.3 per cent for the financial year 2014-15, which in turn impacted its earnings per share (EPS) estimates by 0.7 per cent to 5 per cent.

It added that it expected a decline of 0.6 per cent in the company's revenue on sequential basis for the final quarter of current financial year. Earlier, it was expecting the company's to report a growth of 1.5 per cent in revenue in the same quarter. The changes push our P/E-based price target down to Rs 3,960 (earlier Rs 4,150).

The changes dragged Barclays' P/E-based price target for the company's stock down from Rs 4,150 to Rs 3,960.

Representatives of Barclays recently held a meeting with Infosys' Executive Chairman Narayana Murthy, Chief Executive S D Shibulal and CFO Rajiv Bansal, who suggested that revenue growth for the current financial year would likely come at the lower end of its guidance. However, the management of the company still aims to achieve higher growth rates than the industry in the long etrm.

Infosys shares lost nearly 9 per cent on Thursday in response to the company's announcement that it was expecting this financial year's revenue growth to be weak. The IT services exporter expect its revenue growth to be at 11.5 per cent, lagging peers like HCL Tech and TCS.