UPDATE: J.P. Morgan Initiates Luxoft at Overweight on Attractive Risk/Reward

In a report published Monday, J.P. Morgan analyst Alexei Gogolev initiated coverage on Luxoft LXFT with an Overweight rating and $27.50 price target.

In the report, J.P. Morgan noted, “Luxoft is a leading CEE provider of software and IT solutions to a global customer base. Its forward P/E of 11.8x looks cheap considering a 15-25% discount to its peers, particularly given the robust revenue outlook with a 2013-16 JPMe CAGR of 22%; we also highlight positive optionality from a better macro outlook across DMs. While the stock is up 27% since the IPO, we initiate coverage with an OW given our $27.5/share Aug-14 PT (27% potential upside). However, we would regard high customer concentration as well as wage inflation as potentially representing risks to the operating margin.”

Luxoft closed on Friday at $21.67.