UPDATE: J.P. Morgan Downgrades ExlService Holdings as Loss of Travelers Creates Too Many Headwinds

In a report published Tuesday, J.P. Morgan analyst Tien-tsin Huang downgraded the rating on

from Neutral to Underweight, and lowered the price target from $33.00 to $26.00. In the report, J.P. Morgan noted, “We are downgrading EXLS shares to Underweight (from Neutral) after learning EXLS received a termination notice from Travelers (10% customer). According to the 8-K, the termination was triggered by a breach of client confidentiality policies, which we fear could create a PR issue for EXLS and freeze its deal pipeline in the near term. We've been concerned about building headwinds in 2014, and this is a significant headwind, so we are cutting our estimates and price target significantly and recommend investors avoid the stock until more clarity is gained on the potential fallout of such a loss.” ExlService Holdings closed on Monday at $29.07.