JP Morgan Comments on Genpact Following Pro Forma Financials for 2010

J.P. Morgan has published a research report on Genpact G covering financial disclosures. In the report, J.P. Morgan noted that, "Last night, G filed its pro-forma financial statements for 2010 and Headstrong's historical financials, which included incremental disclosures on the acquired company's margin profile, growth rates and other relevant metrics. We continue to view the acquisition as net positive for G given Headstrong's solid revenue growth and improving margin profile (somewhat balanced by integration and cyclical risks). In this note, we have created the combined company's 2011 income statement (using Headstrong's eight months' contribution). We calculate the acquisition should add roughly 100bps to G's revenue growth and hurt GAAP operating margin by 80bps (and non GAAP margins 20-30bps), to be accretive by ~$0.04 in GAAP EPS and ~$0.08 in non-GAAP EPS." J.P. Morgan rated Genpact a Neutral with a price target of $17.00. Genpact closed Monday at $17.87.