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Infosys to Support KONE's IT Transformation, Expands Presence

Zacks Equity Research

Global leader in consulting and technology services, Infosys Limited INFY recently announced that KONE has selected the company to support its IT transformation. Infosys’ expertise in SAP, systems delivery and automation will help KONE fortify its IT capabilities in application development and maintenance.

Additionally, Infosys has decided to establish its first Design and Innovation Center in Helsinki, expanding presence in the Nordics region. The facility will offer consulting, end-to-end technology as well as systems integration services and will also house a Design Thinking and Innovation lab, enabling greater access to disruptive tools and technologies for clients in the region.

Our Take

In recent times, Infosys has been strengthening core competencies by pursuing strategic acquisitions that enable it to leverage emerging technologies in a mutually beneficial and cost-competitive manner. Over the past few quarters, the company has entered into several strategic partnerships with other technology behemoths to boost digital, cloud, legacy modernization and automation business. These apart, innovative actions like ‘Zero Bench’ program devised by the company to eliminate the notion of “bench” in the IT service industry is also proving to be a major asset, bolstering its internal strength.

However, the fact remains that President Trump’s anti-immigration stance, unfavorable political climate and escalating costs are likely to affectperformance. Moreover,the company’s stock has yielded a negative return of 2.9% in the past three months, against the industry’s average gain of 6.8%.

Nevertheless, we believe the Zacks Rank #3 (Hold) company’s Renew New program, strong innovation, greater operational efficacy, robust revenue growth and increased cash generation will offer Infosys modest growth opportunities in the upcoming quarters.

Stocks to Consider  

Some better-ranked stocks from the same space are MAM Software Group, Inc. MAMS, Nutanix Inc. NTNX and CDK Global, Inc. CDK. While MAM Software and Nutanix sport a Zacks Rank #1 (Strong Buy), CDK Global carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

MAM Software has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 104.2%.

Nutanix Group has outpaced estimates in the preceding four quarters, with an average earnings surprise of 12.9%.

CDK Global has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 11.4%.

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