Friday, March 08, 2013

Infosys surge: another miss for analysts

Infosys surged past Rs 3000 yesterday and has fallen back a bit today. I have no expertise on the IT sector. However, having been in investment banking, I do note with interest- though not with surprise- that analysts completely missed the turnaround in the stock's fortunes.

The big shocker to the analyst community was the favourable revenue guidance given by the company during the last quarter results. That caused analysts, who were predicting a stock price of around Rs 2200 or below in the months ahead, to revise the stock price target upwards. Even then, the higher targets were only around Rs 2850. Some analysts insisted they would wait for another quarter to see if the improvement was sustainable. Then, there was a whole tribe of analysts and media commentators who were telling us that the problem lay with the wrong choice of CEO to succeed Kris Gopalakrishnan, that the exit of most of the founders had changed the company culture completely, etc. So, the stock surging past Rs 3000 is quite a miss for the analyst community.

Of course, in these situations, hindsight is always available. ET, quoting various experts, gives reasons for the stock's improved performance. But the question is worth asking: if analysts can't get it right with a company so visible and so closely tracked as Infosys, what are they there for?

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Anonymous said...

Dear Sir,

Laconic & Marvellous post....

Analysts have failed to comprehend the market movements, very much similar to the case of Apple (which contrarily declined)

Thank you!

Anonymous said...

excellent writing! But there is room for improvement.

sta said...

Technically infosys was not in bearish trend. It was a bullish stock and moved according to the trend.
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