On Monday, Exlservice Holdings, Inc. (NASDAQ:EXLS) stock received an upgraded rating by Jefferies from Hold to Buy. Accompanying the upgrade, the firm also raised the price target for the company's shares to $42.00, up from the previous $35.00.
The decision to raise the rating and price target comes as the headwinds previously affecting the business are believed to have reached their lowest point. The analyst from Jefferies indicated that the valuation, at 19 times their 2025 adjusted earnings per share (EPS) estimate, presents an attractive opportunity given Exlservice's industry-leading double-digit organic growth.
The resilience of Exlservice's business in the current market conditions was also noted as a key factor. The company stands out within its peer group as the only IT Services firm that has not experienced negative earnings revisions for 2024 compared to initial pre-guidance expectations.
The analyst's statement highlighted the company's strengths: "We upgrade EXLS to Buy from Hold, and increase our price target to $42 from $35 as headwinds impacting the underlying business have likely bottomed. Valuation at 19x our 2025 adj EPS estimate is attractive in light of industry leading double-digit organic growth, and the resiliency of the business in the current environment."
Investors and market watchers will likely keep a close eye on Exlservice's performance, as the new rating and price target suggest confidence in the company's potential for growth and stability amidst challenging market dynamics.
In other recent news, ExlService Holdings reported an 11% year-over-year increase in revenue to $448 million in the second quarter of 2024, alongside an 11% growth in adjusted earnings per share to $0.40. This robust financial performance is attributed to the successful execution of a data and AI-led strategy across the Analytics and Digital Operations and Solutions businesses.
The company also announced the acquisition of ITI Data, a strategic move aimed at enhancing its data management capabilities and expanding its client base.
In addition to these developments, ExlService Holdings has revised its full-year revenue guidance upwards to between $1.805 billion and $1.83 billion, indicating an expected growth of 11% to 12% year-over-year. The adjusted earnings per share are anticipated to be in the range of $1.59 to $1.62, reflecting a projected growth of 11% to 13% year-over-year.
ExlService Holdings has also expanded its credit facilities, securing an additional $200 million in funding to increase its financial flexibility. This amendment to its existing credit agreement includes a $100 million increase in revolving credit commitments and a new $100 million term loan facility, managed by Citibank, N.A. as the administrative agent.
This strategic move is designed to provide ExlService Holdings with increased capital for potential investments, operational needs, or other corporate purposes.
InvestingPro Insights
Following the upgraded stock rating and increased price target for Exlservice Holdings, Inc. (NASDAQ:EXLS) by Jefferies, InvestingPro metrics provide additional context to the analyst's perspective. With a market capitalization of $5.73 billion and a P/E ratio of 33.06, Exlservice displays a significant valuation in the market. The P/E ratio, adjusted for the last twelve months as of Q2 2024, stands at 32.49, indicating a robust earnings valuation that supports the analyst's optimism.
InvestingPro Tips highlight the company's strategic financial moves and market performance. Exlservice has been actively buying back shares, a sign of management's confidence in the company's value. Additionally, the company's liquid assets exceed its short-term obligations, suggesting financial stability. However, it's worth noting that four analysts have revised their earnings downwards for the upcoming period, which may warrant caution among investors. Despite this, the company's strong return over the last three months, with a 21.62% price total return, demonstrates its recent market success.
For those interested in a deeper analysis, there are 14 InvestingPro Tips available, which provide further insights into Exlservice's financial health and market position. These tips, along with real-time data, can be found at https://www.investing.com/pro/EXLS and can offer investors a comprehensive understanding of the company's potential.
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