Oppenheimer On iGATE's Potential Patni Acquisition

Oppenheimer has published a research report on iGATE Corporation IGTE after the company announced its potential acquisition deal with Patni Computer Systems PTI. In the report, Oppenheimer writes "Recent concerns about the impact of a Patni deal on IGTE growth and financial prospects are overblown (IGTE stock down ~20% since 11/29/10). In our view, the potential deal not only offers a unique opportunity for IGTE to leapfrog to tier 1 IT services vendor, but also long-term strategic and growth opportunities. In addition, the deal would add scale to help IGTE compete more successfully against the larger incumbent IT services providers, diversify revenue streams, reduce customer concentration and entry into new industry verticals. Based on our analysis, IGTE currently trades at 13x and 8x pro forma 2011E and 2012E P/E, respectively, a significant discount to peers and its growth." Oppenheimer reiterates its Outperform rating and $27 price target. iGATE Corporation closed yesterday at $19.77.