Wipro Stock Downgraded to Sell Despite Price Target Increase by Investec
On Thursday, Wipro Ltd. (WPRO:IN) (NYSE: WIT) stock, a global information technology, consulting, and business process services company, was downgraded from Hold to Sell by Investec. The price target was increased to INR 530.00, up from INR 505.00, reflecting concerns over the company's near-term revenue growth prospects.
The downgrade was due to a reassessment of Wipro's revenue growth estimates for fiscal years 2025 through 2027, which were reduced by 1.8%, 1.7%, and 1.6% respectively. Despite stronger than expected EBIT performance and profit margins, Wipro is still expected to report a revenue decline in FY25.
Investec's valuation model anticipates a CAGR of 7.6% in USD terms from FY24 to FY35E. While there is a possibility of a share buyback, the risk-reward balance for Wipro shares is not favorable at this time.
Recent news includes a 1% decrease in IT services revenue for the first quarter of FY25, but a 6% growth in net income and a 10% growth in earnings per share. Analyst firms have varied perspectives on Wipro's performance, with Nomura/Instinet upgrading its rating to "Buy."
InvestingPro Insights
InvestingPro data shows Wipro's strong market presence with a market cap of $33.02 billion. The company's financial health is robust, with more cash than debt and liquid assets exceeding short-term obligations. Wipro has maintained dividend payments for 24 years.
Despite concerns about near-term revenue growth, Wipro has delivered strong returns over the last five years. Analysts remain optimistic about profitability. For a deeper analysis, InvestingPro offers 10 additional tips for Wipro.
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