The resignation of Vishal Sikka as chief executive officer of Infosys Ltd (NYSE:INFY) introduces new uncertainties regarding the Indian outsourcing firm's transformation, Wedbush Securities says.
“After months of back-and-forth in-fighting between INFY's board (supporting Mr Sikka) with INFY's original founders, headed by Mr Murthy (criticizing the board's and management's corporate governance, among other things), Mr Vishal Sikka submitted his resignation yesterday, while the board nominated COO, Pravin Rao as interim CEO,” explained Wedbush.
Shares in Infosys fell 7.2% to US$14.79 in New York on Friday.
Wedbush saluted Sikka's work on improving employee morale and engineering the company's transformation, saying he brought some stability to the company, staunching the flow of employees leaving the business.
Pravin Rao, an Infosys veteran, will probably continue the company's transformation program, in Wedbush;s view, with a focus on shifting the company's delivery of information technology services into asset-light models, such as the cloud and software-as-a-service, while sustaining existing earnings margin levels.
“Having said that, one should also expect further senior departures,” Wedbush warned.
Stockbroker Baird responded by cutting its price target to US$130 from US$140 and downgraded the stock from 'outperform' to 'neutral'.
BMO Capital, meanwhile, raised its target price for Target Corporation (NYSE:TGT) to US$67 from US$62 after results on Wednesday from the retailer indicated its turnaround may be working.
Analyst Russell Stanley from Echelon Wealth Partners has put a price target of C$1.60 on Pioneering Technology Corp (CVE:PTE), the cooking fire prevention specialist.
Share in the company rose 1.9% on Friday to C$1.06.
Stanley rates the stock as a "speculative buy".
The company's core product is called SmartBurner, a replacement burner for electric coil stoves. The analyst notes that from April 2019, electric coil stoves will have to pass a new test in the United States in order to continue carrying the UL mark that denotes it is safe to use in the home.
In effect, original equipment manufacturers will be obliged to incorporate a fire prevention element into the product.
"We believe PTE has the only product that has passed the new tests thus far," Stanley said.
"This gives PTE a head start, and its patents on this do not expire until 2030," he added.