Infosys, Wipro ADRs fall up to 8% after Accenture guidance cut

The American Depository Receipts (ADRs) of Infosys Ltd came under pressure in premarket trading on Thursday after Accenture lowered its annual revenue growth guidance, triggering a broad selloff across global IT services stocks.

Infosys ADRs were trading over 7% lower at $10.86 apiece. The weakness was visible across the sector, with Wipro ADRs declining over 8% and Cognizant Technology Solutions falling more than 8% in premarket trade. In Europe, Capgemini extended losses to as much as 11%, while Sopra Steria dropped as much as 6%.

Investor sentiment turned cautious after Accenture narrowed the upper end of its full-year revenue growth forecast. The consulting and IT services giant now expects annual revenue growth of 3% to 4% in constant currency terms, compared with its earlier outlook of 3% to 5%. Excluding the roughly 1% impact from its US federal business, the company expects revenue growth of 4% to 5%, down from its previous forecast of 4% to 6%.

Accenture shares were trading around 17% lower in premarket trade at $129 after the company also issued fourth-quarter revenue guidance that fell short of analyst expectations. The company expects fourth-quarter revenue of $17.75 billion to $18.4 billion, below the Street estimate of $18.47 billion.

For the third quarter, Accenture reported earnings per share of $3.80, up from $3.49 a year ago. Revenue increased 5.6% to $18.7 billion but marginally missed analyst estimates of $18.76 billion, according to Reuters. Total bookings declined 1.9% to $19.32 billion, reflecting weaker managed services demand, although consulting bookings rose 13% year-on-year.

Also Read: Accenture shares sink 14% premarket on weaker guidance, Q3 revenue miss

Despite the softer outlook, Accenture maintained that demand for large-scale business transformation remains healthy. The company said it recorded 104 client bookings worth more than $100 million year-to-date, up 13% from a year earlier, while continuing to see growing demand for large-scale artificial intelligence transformation programmes. Operating margin expanded by 20 basis points to 17%.

"Accenture delivered a strong third-quarter, with broad-based revenue growth, a 9% increase in EPS, and $8.2 billion returned to shareholders year-to-date. Demand for large-scale reinvention remains strong — 104 quarterly client bookings of $100 million or more year-to-date, up 13% — and we are seeing more large-scale AI transformation programs," Chief Executive Officer Julie Sweet said.