Results And Outlook By Offshore Firms To Give An Insight Into IT Services Sector

Offshore bellwethers Infosys INFY and TCS are set to kick off the June quarter earnings season this week. According to Goldman Sachs, “The results and outlook will provide an important read on the current demand backdrop for offshore services relevant for ACN, CSC, CTSH, EXLS, G, and WNS. Important model drivers for understanding the current momentum include the pace of headcount additions, billed volume growth, pricing, utilization, pipeline momentum, and vertical.geo demand comments, particularly Europe. “ “2Q results from JPM, BAC, and C (all reporting this week) and foreclosure data for the month of June should provide a read on mortgage origination and delinquency trends. Overall, we expect the results and data to reinforce our positive view on Buy-rated LPS underpinned by a protracted default cycle, the increase in regulatory and compliance requirements driving demand for LPS’ origination and TD&A services, and attractive valuation at 8X CY11E EPS vs. average EPS growth of 13% through 2012E,” the analysts say. Visa V, which was added to the Conviction Buy List last week, “offer an attractive entry point, given V’s high exposure to faster growing debit and its immaterial exposure to Europe,” Goldman Sachs adds. More Analyst Ratings here.