Needham & Company Downgrades Exlservice (EXLS) to Hold

March 4, 2013 7:58 AM EST
Get Alerts EXLS Hot Sheet
Price: $47.51 --0%

Rating Summary:
    8 Buy, 5 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 7 | Down: 9 | New: 1
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Needham & Company downgraded Exlservice (NASDAQ: EXLS) from Buy to Hold.

The firm comments, "While EXLS delivered a decent 4Q and provided initial FY13 guidance consistent with market expectations, we believe increased competition from both pure-play BPOs and the large IT services firms, especially as EXLS competes for bigger deals, could weigh on organic growth in the near to medium term. At the same time, we see limited room for EXLS to expand margins since these larger deals tend to be margin-dilutive during the ramp-up phase, which can be over 1-2 years. While we see EXLS as one of the best positioned pure-play BPOs, with strong horizontal and vertical capabilities, based on our expectation of slower internal growth (8.5% in FY13, down from low-teens in FY12), compounded by client transitions from the OPI deal (5-6% revenue drag in FY13), and limited potential for margin expansion we expect the stock to be range-bound over the next 12 months."

For an analyst ratings summary and ratings history on Exlservice click here. For more ratings news on Exlservice click here.

Shares of Exlservice closed at $31.81 yesterday.

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