Syntel Downgraded At J.P. Morgan, Warns Consensus Too High

Loading...
Loading...
In a report published Wednesday, JPMorgan analyst Punit Jain downgraded the rating on
Syntel, IncSYNT
from Neutral to Underweight, while reducing the price target from $50 to $48. Potential consolidation in the healthcare segment may restrict client spending in 2H and thus hit Syntel's revenues. The company's FY15 guidance incorporates high growth acceleration for the rest of year, driven by improved healthcare vertical spending. Analyst Punit Jain pointed out that the acquisition of
Humana Inc
HUM
, a very old customer of Syntel, by
Aetna IncAET
could result in a potential delay in discretionary projects. This in turn could hurt Syntel's growth, Jain added. Recent layoffs by the company are also indicative of a not very high increase in near-term demand. In the report JP Morgan noted, "Syntel's FY guidance implies7.5-9.5% in average sequential growth for the rest of the year which compares w/ its 2Q-4Q average sequential growth of 4.8% (and range of 2.5-6.5%) in the prior 4 years when the demand environment was much better than what it is now. We expect most peers to grow at low-to-mid single digits sequentially, and view SYNT's targets as a difficult bar this year." The revenue estimates for FY15 have been reduced from $969M to $965M, while the EPS estimate for the year has been raised from $2.68 to $2.73 to reflect more favorable forex trends.
Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorDowngradesPrice TargetAnalyst RatingsJPMorgan
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...