Deutsche Bank Lowers Price Target on HiSoft (HSFT), Factors in Lowered Guidance
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Price: $9.27 --0%
Rating Summary:
9 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
9 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Even as near-term risks remain with HiSoft (Nasdaq: HSFT), due to the recent events in Japan, Deutsche Bank reiterated its Buy rating as long-term prospects remain strong.
Due to some revised guidance that factors in the earthquake, the firm is lowering its price target from $31 to $28 as it now only expects revenue growth of 33% for the year instead of its previous expectation of 35%. The GM and OPM outlook was also lowered due primarily to the Q1 impact of work stoppage and relocation costs with some lingering margin pressure into Q2; Deutsche sees margins recovering in H212.
The firm notes that by listening to customer feedback it can tell the no material changes have been made to the business trends. Management indicates =some delays will take place, but at this time there are no contract cancellations or major structural changes to underlying client operations.
Deutsche comments that, "With revenues in Japan heavily weighted to “sticky” IT Services work we believe the risk to further downside revisions is limited. In fact, early conversations with clients point to potential increased offshoring demand to reduce operational risk due to infrastructure problems that may persist during Japan’s rebuilding effort."
Due to some revised guidance that factors in the earthquake, the firm is lowering its price target from $31 to $28 as it now only expects revenue growth of 33% for the year instead of its previous expectation of 35%. The GM and OPM outlook was also lowered due primarily to the Q1 impact of work stoppage and relocation costs with some lingering margin pressure into Q2; Deutsche sees margins recovering in H212.
The firm notes that by listening to customer feedback it can tell the no material changes have been made to the business trends. Management indicates =some delays will take place, but at this time there are no contract cancellations or major structural changes to underlying client operations.
Deutsche comments that, "With revenues in Japan heavily weighted to “sticky” IT Services work we believe the risk to further downside revisions is limited. In fact, early conversations with clients point to potential increased offshoring demand to reduce operational risk due to infrastructure problems that may persist during Japan’s rebuilding effort."
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