Citi recently named one under-the-radar company to buy on a “data and AI opportunity.” That’s U.S.-listed ExlService Holdings , an analytics and digital solutions company. “With AI, EXLS views its differentiation and opportunity in its ability to combine domain, data, and AI expertise to embed AI into client workflows and fine-tune models to get higher accuracy levels,” Citi said in a May 8 note. Citi noted that ExlService said its current exposure to its data and artificial intelligence-led business is at about 51% of its 2023 revenue. That has grown at a 32% compound annual growth rate since 2020, according to the Citi note. The company pivoted to data and AI only in recent years, but is now able to meet demand for AI services, Citi noted, adding that the company said its total addressable market has increased nearly three times to $950 billion — from $350 billion before the AI business. Citi said the company has highlighted some factors that can drive growth, including tapping its data capabilities to target “higher value” potential customers, and increasing revenue mix via partnerships. The bank pointed out that ExlService has the talent to meet the demand too, with its more than 13,000 AI, generative AI, data and digital “experts.” “EXLS also provided medium-term targets (2024-25) of double digit revenue growth, incremental margin improvement, and faster-than-revenue EPS growth,” Citi analysts wrote. “We continue to like EXLS’ positioning to meet these demand trends and continue its industry-leading growth levels along with its beat-and-raise execution,” they added. The current demand pipeline for its data and AI services stand at $2 billion, according to Citi. The bank gave the stock a buy rating and a price target of $37, or potential upside of 22%. According to FactSet, analysts covering the stock give it a 73% buy rating and average upside of 20.9%, with a consensus price target of $36.61.
