Thomas Weisel Partners Rates ExlService Holdings (EXLS) Overweight

Thomas Weisel Partners analysts David Grossman, Melissa Moran and Nicole Conway rated shares of ExlService Holdings, Inc. (Nasdaq: EXLS) Overweight, with a price target of $21.

The analysts said that ExlService Holdings gets 55% of its revenue from the largest companies in the insurance market but that about 700 companies that comprise the middle market could account for even more revenue than the larger companies.

The Thomas Weisel Partners analysts wrote, "TWP hosted EXLS at a series of investor meetings on Friday, March 26. Consistent with the 4Q earnings report on March 10, fundamentals are improving and the industry appears to have reached a turning point. Activity has picked up among both new and existing customers and EXLS’ pipeline is the strongest in its history. That being said, 2010 guidance was perceived to be somewhat conservative (revenue guidance approximated the 4Q run rate plus AMEX, and margin guidance is down y/y) however this reflects known headwinds (Aviva run-off, new facility build out and currency); in addition to the length of the sales cycle and new client ramp period (9-12 month sales cycle and 24 month period for a client to get to a full revenue run rate)."