Citi recently named a lesser-known company as an acquisition target for “data and AI opportunities.” That is ExlService Holdings, a US-listed analytics and digital solutions company. “When it comes to AI, EXLS sees differentiation and opportunity in its ability to combine domain, data and AI expertise to embed AI into clients' workflows and fine-tune models to achieve higher levels of accuracy.” Citi said in a May 8 memo. Citi noted that ExlService said its current exposure to data and artificial intelligence-driven businesses amounted to approximately 51% of its 2023 revenue. Since 2020, the average annual growth rate has been 32%, according to a Citi note. Although the company has shifted its focus to data and AI in recent years, Citi points out that it is now able to meet the demand for AI services, and its total addressable market is higher than before the introduction of AI. It added that it had almost tripled from $350 billion to $950 billion. work. Citi highlighted several factors that could drive growth, including the company leveraging its data capabilities to target “higher-value” potential customers and expanding its revenue mix through partnerships. He said there was. The bank noted that ExlService has more than 13,000 AI, generative AI, data and digital “experts” who have the talent to meet demand. “EXLS also presented a medium-term target (2024-25) of double-digit revenue growth, progressive margin improvement, and EPS growth above revenue,” Citi analysts said. “We continue to like EXLS's positioning to meet these demand trends and continue its industry-leading growth levels with beat-and-raise execution,” they added. Citi says it has a current demand pipeline of $2 billion for its data and AI services. The bank gave the stock a buy rating and a price target of $37, or a potential upside of 22%. Analysts covering the stock give it a 73% buy rating, an average upside of 20.9% and a consensus price target of $36.61, according to FactSet.