JP Morgan Lowers PT On Syntel To $64

JP Morgan has published a research report on Syntel SYNT covering the company's reportedly weak 1Q earnings. In the report, JP Morgan writes, "SYNT reported weak 1Q results, stemming from significant margin deterioration. The stock was down significantly last Thursday, on the quarterly margin scare and concerns over CY11 margin outlook. However, the magnitude of the miss likely overshadowed the company's underutilized resources- ~40% of offshore ITS headcount was on bench in 1Q, and ~6,000 new seats are coming up- providing a nice source of earnings power should demand comes through. We believe a potentially solid revenue growth (in 2Q and 3Q), assuming the bull view materializes, should more than offset the upcoming headwinds and lift the overall margins significantly. While we were likely early with our upgrade, we maintain our OW rating on SYNT as we still believe offshore demand environment is strong with 2Q growth potentially putting CY11 estimates on a nice trajectory and improving sentiment on the stock. Until then, we believe SYNT stock requires patience given lack of intra-qtr catalysts." JP Morgan maintains its Overweight rating but has lowered the price target from $66 to $64. Syntel closed Thursday at $52.20.