On Monday, Citi reiterated its Buy rating on Exlservice (NASDAQ:EXLS) stock, maintaining a $37.00 price target. The firm's stance remains optimistic despite the recent underperformance of Exlservice shares following the announcement of layoffs affecting less than 1% of its workforce. The market's negative reaction to the news is considered excessive by the analyst.
Exlservice is anticipated to report its first-quarter 2024 results with an outlook that could exceed expectations. The company's earnings per share (EPS) forecast is expected to benefit from a recently announced accelerated share repurchase (ASR) agreement, which has not yet been factored into consensus estimates.
Citi's analyst predicts that another quarter of solid performance by Exlservice could lead to a positive market response. This strong execution is also expected to alleviate some of the concerns investors have about the impact of artificial intelligence on the company's future.
The company's decision to buy back shares at an accelerated pace is seen as a strategic move that could positively influence its earnings outlook. The analyst suggests that this aspect of Exlservice's financial strategy has been overlooked by the market.
Overall, Citi's analysis suggests confidence in Exlservice's ability to maintain its operational excellence. The firm anticipates that the forthcoming quarterly results will not only meet but potentially raise the financial outlook, which could, in turn, improve investor sentiment.
InvestingPro Insights
As Exlservice (NASDAQ:EXLS) gears up to release its first-quarter 2024 results, real-time data from InvestingPro provides a broader financial context. With a market capitalization of $4.86 billion USD and a P/E ratio of 26.3, Exlservice is trading at a valuation that reflects its earnings potential. The company has demonstrated robust revenue growth over the last twelve months, with a notable increase of 15.48%, indicating a strong financial performance that could bolster investor confidence ahead of the earnings report.
InvestingPro Tips highlight Exlservice's solid financial footing, as the company holds more cash than debt, suggesting a resilient balance sheet. Additionally, the company's cash flows are more than adequate to cover interest payments, offering further assurance of financial stability. With analysts predicting profitability for the current year and a history of high returns over the last decade, these insights could be a beacon for investors navigating the uncertainty around the impact of artificial intelligence on Exlservice's future.
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