Oppenheimer Lowering Price Target On iGATE (IGTE)

Oppenheimer & Co. is lowering its price target on shares of iGATE Corp. IGTE to $24 from $27, but is maintaining its Outperform rating. In a note to clients, Oppenheimer writes, "After recently assuming research coverage, we have taken a fresh look at iGate, and the merits of its pending acquisition of a majority stake in Patni (PTI). We are generally skeptical of large services acquisitions. Also, PTI is more than twice the size of iGate and has a mixed execution track record. Accordingly, the pending acquisition is risky, in our view. However, iGate trades at ~7x our pro forma FY12E EBITDA estimate (Tier 1 comps trade at more than 13x FY12E EBITDA on average) and ~12x our pro forma EPS estimate. In short, the transaction, while risky, appears more than discounted. Accordingly, we reiterate our Outperform rating and adjust PT to $24 from $27." Shares of IGTE lost 75 cents yesterday to close at $18.29, a loss of nearly 4%.