Is Syntel Now Just A Hold?

In a report published Monday, Maxim Group analyst Brian Kinstlinger downgraded

, with the price target maintained at $54. The downgrade comes in the wake of a jump in the share price, along with expectations of a slowdown in the company's growth rate. Syntel's shares have surged 16% year to date versus a 2% advance in the Russell 2000 during the same period. Investors supported the shares, despite what the analyst considers as "a disappointing 2H14." In the report Maxim Group noted, "During 3Q14, the company's healthcare business experienced weakness, and the company lowered its 2014 annual revenue guidance. Demand for healthcare IT services declined sequentially again in 4Q14, though management said that it is beginning to see signs of improved sector-related demand. At the same time, growth from the company's third largest customer, FedEx (FDX-$164.59-NR), was slowing significantly after a stellar 2013." The company has reported annual revenue at the low end of its guidance range in two of the last three years - 2012 and 2014, after having achieved annual revenue at or above the high end of its guidance range for several years - 2005 to 2011. "Not only was overall IT spending more robust in most years, but SYNT had the benefit of both its top customer American Express and State Street growing faster than the company average. Those customers are now more mature and not contributing to revenue growth, making outperformance more difficult," Kinstlinger wrote. The analyst expects the company to report revenue at the low end of its guidance range again in 2015. "Not only should the company's healthcare segment be flat to down in 2015, by our estimate, but the slowing growth in Retail, Logistics, and Telecom (RLT) will also likely temper revenue growth." Following the recent increase in the company's share price, the stock now fully accounts for the growth prospects. "We believe its customer concentration will continue to lead to slower top-line growth than the peer group. Furthermore, barring changes to foreign exchange rates, we expect investments in its digital practice (among others) to lead to modest contraction," Kinstlinger added.