Virtusa (VRTU): Cutting PT To $24 - Needham
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Needham & Company analyst, Mayank Tandon, reiterated his Buy rating on shares of Virtusa (NASDAQ: VRTU) but cut his price target to $24 from $32 after the company delivered in line 2Q results, showing improved revenue momentum in the key banking, financial services, and insurance vertical.
While the revenue guidance for FY17 was essentially maintained, management once again lowered the EPS range to account for lower utilization, higher onsite effort, and currency headwinds. Despite the lower margin outlook, the analyst believes the stability in revenue trends despite industry cyclical pressures should lead to sequential margin improvement, albeit at a slower rate.
The stock trading is currently trading 8x FY18 EPS (ex-cash ) making the risk-reward for small-cap value-based investors appealing.
Shares of Virtusa closed at $18.80 yesterday.
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