WNS Revenue Growth Remains Muted

Analysts at Janney Montgomery Scott downgrade WNS (Holdings) Limited (NYSE: WNS) from "buy" to "neutral."

Janney Montgomery Scott expects “volumes to remain stable, but below prior levels in the travel business” for WNS. “The travel recovery has been slowest in North America and Europe, which have continually contracted since mid-2008 (International Air Transport Association-IATA). North America experienced only a 2% (y/y) pickup in passenger traffic in January 2010 after being down 5% in 2009. Europe experienced a 3% (y/y) increase in January after pulling back 3% in 2009. For 2010, Europe is expected to have a $2.2 billion (bn) loss, with demand improving only 4%. North America is expected to lose $1.8 bn in 2010 with demand improving just 6% (IATA). There have been fewer flights and delays in recent quarters, which translates into less revenue opportunities for WNS,” the analysts say.

According to Janney Montgomery Scott, “Aviva's minimum volume commitment with WNS provides a level of stability, but upside remains muted. Overall revenue growth will be dependent on WNS' ability to ramp new clients, which we believe will be slower than expected.”

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