Lake Street Capital Markets Downgrades StarTek (SRT) to Hold

Lake Street Capital Markets downgraded StarTek (NYSE: SRT) from Buy to Hold with a price target of $8.00 (from $10.00). Analyst Matt Blazei pointed to disappointing Q1 results and reduced volumes from its largest client.

"We believe the stock could remain range-bound for the coming quarters until investors see a return of double-digit organic growth, which we now estimate will be in early 2016. Thus we are changing our recommendation to HOLD at this time," said Blazei.

"StarTek is significantly smaller than its public peers ($120MM vs $1B-$2B market cap) and is just beginning to realize the benefits of its restructuring and turnaround. Given the early stages of StarTek’s growth recovery and the significant margin opportunity over the next three years, we believe investors will pay a premium for this growth relative to the BPO/Call Center universe. We are using a 7.5x EV/EBITDA multiple on our 2016 estimate to reach our $8 price target," added the analyst.

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

Shares of StarTek closed at $7.88 yesterday.

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