Needham & Company Cuts Price Target on Syntel, Inc. (SYNT) Following Weak 3Q
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Needham & Company reiterated a Buy rating on Syntel, Inc. (NASDAQ: SYNT), and cut the price target to $27.00 (from $48.00), following the company's "weaker than expected" 3Q results. Revenue came in at $241.2 million, down 4.9% Y/Y, and below consensus of $249.9 million. Uncertainty continues to impact spending. Management also lowered guidance for the rest of FY16. Management is now expecting revenue to be between $960 million and $970 million ($980 - $1010 million previously).
Analyst Mayank Tandon commented, "SYNT delivered a weaker than expected 3Q, missing on revenue as decision cycles elongate and customer spending remains muted. The large banking and healthcare verticals remain challenged by industry headwinds, and only the insurance vertical grew on a sequential basis. Management also lowered guidance for the rest of FY16, as deals that were expected to close in 2H have slipped. While the continued growth dormancy is disappointing, we believe that encouraging signs in the pipeline provide recovery potential should conversion pick up into FY17. We also note that the shares trade at an inexpensive 9x our FY17 EPS, limiting downside risk. We are maintaining our BUY rating and lowering our target to $27."
Shares of Syntel, Inc. closed at $26.44 yesterday.
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