BMO Slashes Infosys Target Price to $18 Amid Tepid Growth Outlook and Cautious Guidance

Unknown Apr 02, 2026 1 Views

BMO Capital Markets has sharply reduced its target price for Infosys (NYSE: INFY) from $25 to $18, reflecting mounting concerns over the IT giant’s muted growth guidance and ongoing demand headwinds. Despite maintaining a “Market Perform” rating, BMO’s move follows Infosys’ recent fiscal 2026 outlook, which projected constant currency revenue growth of just 0–3%—a forecast that fell short of market expectations and signaled a challenging environment for the sector.

Key Highlights:

Disappointing Guidance: Infosys’ FY26 revenue growth guidance of 0–3% in constant currency terms, excluding recent acquisitions, failed to inspire confidence, especially as it trailed analyst estimates and highlighted persistent weakness in discretionary IT spending.
Stock Performance: The company’s shares have slumped 25–27% over the past six months, trading recently at $16.14, as investors react to the subdued outlook and a sequential revenue decline of 3.5% in the latest quarter—worse than peers TCS and Wipro.
Analyst Sentiment: Multiple brokerages have trimmed their price targets post-results. Bernstein SocGen cut its target to INR 1,680 while maintaining an Outperform rating, and UBS, Jefferies, and Nomura have all lowered targets but remain constructive, citing long-term fundamentals and improved free cash flow.
Earnings Snapshot: Infosys reported a 1.8% rise in net profit for FY25, its second-slowest since listing, and missed its full-year constant currency revenue growth forecast. Management cited macro uncertainty and a weak exit rate from FY25 as key challenges.

Outlook: While some analysts see the cautious guidance as prudent in today’s volatile environment, others warn that achieving the upper end of the range will be difficult without a significant pickup in demand. Nevertheless, Infosys’ strong financial health, dividend track record, and ongoing deal ramp-ups offer some support for the stock.

Overall, BMO’s target cut underscores the cautious sentiment around Infosys as it navigates macroeconomic headwinds, competitive pressures, and a slower growth trajectory in the near term.

Source: Investing.com, CNBC-TV18, Moneycontrol

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