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 Glowering 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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