Needham & Company Lowers Ests on Syntel (SYNT) Amid Special Dividend; Affirms at 'Buy'
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Needham & Company is updating its estimates on Buy-rated Syntel (Nasdaq: SYNT) following a special cash dividend announced earlier. The firm maintains its $48 price target on the stock.
The firm commented,
Syntel announced a $15 per share special cash dividend which will be payable on October 3rd to shareholders of record at the close of business on September 22nd. The expectation is that the shares will begin trading ex-dividend on October 4th. The special dividend will be funded through dividends paid by U.S. subsidiaries, a one-time repatriation of $1.24B in cash held by foreign subsidiaries, and a portion of borrowings under a new credit facility (the company expanded its borrowing capacity to $500 million from $200 million).
Due to the one-time repatriation of cash, the company expects to incur $264 million in incremental tax expense in 3Q16. As a result of the tax burden and other changes to "other income" related to the issuance of the dividend, the company revised its 2016 EPS outlook downward from EPS of $2.55- $2.70 to a loss of ($0.60)-($0.75) per share. The company made no changes to the outlook for revenue or margins.
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