Earnings Release: Here's Why Analysts Cut Their Wipro Limited (NSE:WIPRO) Price Target To ₹178
Wipro Limited (NSE:WIPRO) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues of ₹245b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at ₹3.20, missing estimates by 3.6%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Wipro after the latest results.
Taking into account the latest results, the most recent consensus for Wipro from 40 analysts is for revenues of ₹987.5b in 2027. If met, it would imply an okay 4.1% increase on its revenue over the past 12 months. Statutory per share are forecast to be ₹13.32, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of ₹994.6b and earnings per share (EPS) of ₹13.76 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
Check out our latest analysis for Wipro
It might be a surprise to learn that the consensus price target fell 7.0% to ₹178, with the analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Wipro at ₹226 per share, while the most bearish prices it at ₹150. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Wipro's growth to accelerate, with the forecast 5.5% annualised growth to the end of 2027 ranking favourably alongside historical growth of 4.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Wipro is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Wipro. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Wipro going out to 2029, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Wipro , and understanding it should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.