Incrementally Harder Path Ahead Of Genpact, This Analyst Does Not Envision An Upside

BMO Capital Markets analyst Keith Bachman retained a Market Perform rating on the shares of Genpact Limited G, lowering the price target to $46 from $53.
After reiteration of FY23 guidance in the first quarter, the analyst cautioned that the 2H implied revenue ramp raises some risk, even with solid March quarter bookings.
While large deals and long-natured contracts in 2H is a positive, Genpact has to pave through an "incrementally harder" path to meet guidance going ahead.
Given the above risks, the analyst does not envision an upside for the firm.
The analyst notes there is an incremental risk to the guide, as well as risk of gen AI more broadly in IT services longer term.
However, lower attrition and moving margins are expected to buoy optimism for Genpact.
Most of the margin expansion will come from an improved mix on existing services to offset large deal dilutive pricing, including more onshore delivery, as well as SG&A efficiency, the analyst added.
Price Action: G is trading lower by 7.6% to $36.02 in the market session on the last check Thursday.

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