By Sam Boughedda
TaskUs Inc (NASDAQ:TASK) was downgraded to Neutral from Buy at Goldman Sachs on Wednesday, with its price target lowered to $24 from $26.
An analyst said the firm is moving to the sidelines with meaningful headwinds ahead.
"TASK reported healthy growth for 2Q with better-than-expected revenue and profitability. However, management guided 3Q revenue growth under expectations (8% below consensus at the midpoint) and cut full-year guidance below consensus," said the analyst. "Although investors anticipated headwinds from exposure to emerging customers ahead of the earnings report, including crypto and equity trading, guidance and commentary implies revenue deceleration from 37% y/y this Q to mid-single-digit levels in 4Q with lower growth persisting into the first half of next year."
The analyst did state there are positives for the company, with the business remaining relatively healthy, as the company "offers a platform to support lower cost operations at a time when emerging growth customers are looking for ways to operate more efficiently."
"The stock currently trades at a discount to peers on our now substantially de-risked numbers. However, as a result of the magnitude and duration of headwinds ahead, and reliance on performance in the back of FY23 for a return to better growth, we are moving to Neutral rated," added the analyst. "We believe TASK will continue to trade at a discount until the company can establish a track record of better performance and offer investors greater comfort that estimates and valuation adequately reflect risk embedded in the company's customer base."
TaskUs shares are up 1% at the time of writing on Wednesday.