UPDATE: Stifel Nicolaus Cuts PT to ExlService Holdings; Delay in Growth

Stifel Nicolaus reduces its price target on Buy-rated ExlService Holdings

from $34 to $31 as customer delays push growth and potential stock performance into the second half of the year. Stifel Nicolaus notes, "The transformation business declined over $2mn q/q (-12% q/q and down 8% y/y) primarily driven by two existing clients that pushed new contract activity from 1Q to the end of 2Q. Per management, these issues were customer specific and the transformation business is expected to grow q/q in 2Q and y/y in 3Q. Outsourcing revenue grew 5% q/q and 58% y/y (15% organic at cc). The company experienced lengthening sales cycles from delays in signing large strategic outsourcing deals (~85% of revenue); however, management does not see any secular changes in the business and the pipeline continues to grow. That said, we estimate the delayed decision making will likely negatively impact 2012 revenue by ~$2-4mn." EXLS closed at $26.02 on Thursday.