UPDATE: Nomura Raises PT on iGATE on Reasons for Caution

In a report published Friday, Nomura analyst Ashwin Mehta reiterated a Neutral rating on

, and raised the price target from $28.00 to $29.00. In the report, Nomura noted, “Despite iGATE's 3Q revenue and margin outperformance, we would be cautious on extrapolating the result as the company: 1) intends to be more selective in deal pursuits and focuses more on executing the already signed deal flow and 2) invests in building domain capabilities and staff training so as to address current constraints in scaling up. We believe these measures could: 1) cap upsides to our revenue growth estimate of ~11% in FY14F and 2) lead to reinvestment of margin gains as utilization moderates and hiring of higher cost domain intensive resources picks up. Valuations of 14x FY14F limit material upside. We maintain our Neutral rating.” iGATE Corporation closed on Thursday at $30.59.