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Peregrine Systems gains after analyst does about-face

Less than a week after downgrading Peregrine Systems, Prudential Securities had a change of heart Monday. It upgraded the business software developer back to a "strong buy" recommendation, helping to push the stock up 3 7/16, or 10 percent, to 37 1/16.

On Thursday, Prudential analyst David Breiner cut the stock from a "strong buy" rating to "accumulate" after the company said it would buy e-business software developer Harbinger Corp. (Nasdaq: HRBC).

At the time the deal was announced, Peregrine (Nasdaq: PRGN) shares were trading around $60 a share, making the deal worth about $2.1 billion.

But Peregrine shares have been unable to snap out of their descent.

In late March, the stock was trading at a 52-week high of 80 5/8 after splitting 2-for-1 in February.

On Monday, Breiner boosted Peregrine's 12-month price target to $62 a share from $46, saying the stock had been "oversold" and that he's more optimistic about the acquisition.

"Peregrine will benefit by receiving additional revenue as well as cost savings," he said in a research note. "Both companies have been investing heavily on marketing, which can be combined now."

Harbinger shares were up 2 3/16 to 26 13/16 Monday afternoon.

The deal will merge Peregrine's employee self-service and electronic infrastructure management products with Harbinger's business-to-business e-commerce delivery solutions, the companies said in a statement.

Peregrine had been willing to pay an 80 percent premium for Harbinger based on last week's stock price.

The deal is expected to close sometime in July.

Eleven of the 12 analysts covering the stock maintain either a "buy" or "strong buy" recommendation.