Infosys (INFY) to Aid A.S. Watson in Digital Transformation

 

Infosys Limited INFY recently announced that A.S. Watson Group (ASW), the largest international health and beauty retailer in the world, has selected Infosys to accelerate its digital transformation initiatives. The collaboration aligns with ASW’s Technology Partnership Program, which focuses on developing strategic partnerships to augment the long-term goals.

A.S. Watson Group selected Infosys as an Official Technology Partner to offer technology services across Data Science and Artificial Intelligence. The collaboration supports ASW’s customer strategy, DARE — to be Different, Anywhere, build Relationships and offer unique Experiences. Infosys’ services and technologies will help ASW accelerate its next-generation digital marketing platform, optimize operational efficiencies, build robust AI and Machine Learning frameworks as well as improve scalability & reusability across business units.

Our Take

Infosys has been strengthening its core competencies by pursuing strategic collaborations and acquisitions that allow it to leverage emerging technologies in a mutually beneficial and cost-competitive manner. In past few quarters, the company has entered into several strategic collaborations with other technology biggies to boost digital, cloud, legacy modernization and automation business. Further, innovative actions like ‘Zero Bench’ program devised by the company to eliminate the notion of “bench” in the IT service industry are bolstering its internal strength.

Moreover, the company’s “Renew New” program, which includes restructuring of customer-centric functions, streamlining of sales function and unification of delivery systems, is proving to be highly beneficial. These initiatives are allowing the company to counter major challenges. Moreover, its services and software are proving conducive to top-line growth. Strong demand for these relatively new services is helping the company to achieve higher growth as well as margin expansion. Notably, the Zacks Rank #3 (Hold) company’s stock has appreciated 27.1% in the past three months, outperforming the industry’s growth of 11.2%.

 

Despite these positives, President Trump’s anti-immigration stance and escalating costs are likely to affect performance. The company’s growth momentum may be thwarted due to unfavorable political climate in the United States. In the past few months, the company has been struggling to adapt itself to the changing political climate in the region. This is a direct threat to the company’s economical cost structure, which focuses on using its workforce on sites located abroad.

Stocks to Consider

Some better-ranked stocks from the same space are Micron Technology, Inc. MU, Arista Networks, Inc. ANET and AMTEK, Inc. AME. While Micron Technology sports a Zacks Rank #1 (Strong Buy), Arista Networks and AMTEK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Micron Technology has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 10.2%.

Arista Networks has outpaced estimates in the preceding four quarters, with an average earnings surprise of 27.5%.

AMTEK has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 4.1%.

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