Wipro (WIT – Research Report), the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Sachin Mittal from DBS maintained a Sell rating on the stock and has a $2.37 price target.
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Sachin Mittal has given his Sell rating due to a combination of factors impacting Wipro’s financial performance and market position. Despite meeting street expectations with its operating income and revenue, Wipro’s guidance for the upcoming quarter indicates a decline in IT service revenue, which falls short of market expectations. This is compounded by ongoing supply-side challenges that have pressured margins, with rising labor costs and higher attrition rates contributing to a decline in EBIT margin.
Additionally, macroeconomic factors such as a potential global recession, uncertain tariffs, and stricter H-1B policies are expected to negatively impact IT spending. These challenges, along with Wipro’s slower-than-expected revenue growth from new deals, have led to a revised target price and a higher discount to its peer multiple. The company’s higher exposure to consultancy services, which may underperform in an economic slowdown, and difficulties in integrating new acquisitions further justify the Sell rating.
WIT’s price has also changed moderately for the past six months – from $3.630 to $3.070, which is a -15.43% drop .