Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

India It services / Thematic (Sector/Industry)

Legal immigration reform remains a target for the new U.S. administration under President Donald Trump, and while the final legislature and impact are unknown, we believe the looming decision-making is causing consternation for companies whose business models rely on help from H-1B visas. Within IT services, <a href="https://www.smartkarma.com/entities/2785" target="_blank" data-smartkarma-citation="entities:2785:1">Cognizant Tech Solutions (CTSH US)</a>, <a href="https://www.smartkarma.com/entities/267" target="_blank" data-smartkarma-citation="entities:267:1">Infosys Ltd (INFO IN)</a>, <a href="https://www.smartkarma.com/entities/18708" target="_blank" data-smartkarma-citation="entities:18708:1">Tata Consultancy Svcs Ltd (TCS IN)</a>, and <a href="https://www.smartkarma.com/entities/15360" target="_blank" data-smartkarma-citation="entities:15360:1">Wipro Ltd (WPRO IN)</a> are the most exposed vendors to legal immigration reform risks as the U.S. government appears to be concerned about companies importing and employing overseas IT workers to the detriment of U.S. IT workers. In turn, we have raised the uncertainty ratings of Cognizant, Infosys, TCS, and Wipro to high from medium.We have reviewed the variety of proposals around H-1B visas, including the U.S.' latest comments on April 3, but, ultimately, we maintain our fair value estimates for these vendors and like the risk/reward offered by the market today. We believe that wage comparability, changing business models, local M&amp;A, outsourcing, automation, political pressure, and skill scarcity are likely to mitigate higher visa wages caused by immigration reform. We also maintain our narrow moat ratings, as we believe that switching costs remain just as relevant for existing clients of these IT services leaders.Cognizant remains our favored undervalued name in the space and continues to trade in 4-star territory, while Infosys and Wipro's Indian-listed shares also look cheap. Based on current market prices, Cognizant, Infosys, TCS, and Wipro are all trading close to a scenario where average wages per replacement employee (a blend between visa and U.S. sourced employees) are about $100,000 per year, up from current wages in the $80,000 range. With the market pricing in such scenarios, we think investors face limited downside risk given the discount already on offer for these stocks, particularly as we think a rise in costs to $90,000 per new employee is the most likely bear case and as we reiterate our current fair value estimates.Analyst: Andrew Lange

Legal immigration reform remains a target for the new U.S. administration under President Donald Trump, and while the final legislature and impact are unknown, we believe the looming decision-making is causing consternation for companies whose business models rely on help from H-1B visas. Within IT services, Cognizant Tech Solutions (CTSH US), Infosys Ltd (INFO IN), Tata Consultancy Svcs Ltd (TCS IN), and Wipro Ltd (WPRO IN) are the most exposed vendors to legal immigration reform risks as the U.S. government appears to be concerned about companies importing and employing overseas IT workers to the detriment of U.S. IT workers. In turn, we have raised the uncertainty ratings of Cognizant, Infosys, TCS, and Wipro to high from medium.We have reviewed the variety of proposals around H-1B visas, including the U.S.' latest comments on April 3, but, ultimately, we maintain our fair value estimates for these vendors and like the risk/reward offered by the market today. We believe that wage comparability, changing business models, local M&amp;A, outsourcing, automation, political pressure, and skill scarcity are likely to mitigate higher visa wages caused by immigration reform. We also maintain our narrow moat ratings, as we believe that switching costs remain just as relevant for existing clients of these IT services leaders.Cognizant remains our favored undervalued name in the space and continues to trade in 4-star territory, while Infosys and Wipro's Indian-listed shares also look cheap. Based on current market prices, Cognizant, Infosys, TCS, and Wipro are all trading close to a scenario where average wages per replacement employee (a blend between visa and U.S. sourced employees) are about $100,000 per year, up from current wages in the $80,000 range. With the market pricing in such scenarios, we think investors face limited downside risk given the discount already on offer for these stocks, particularly as we think a rise in costs to $90,000 per new employee is the most likely bear case and as we reiterate our current fair value estimates.Analyst: Andrew Lange

Don't Fret Over Looming H-1B Visa Restrictions, We See Upside in Offshore IT Services