The highflying share prices of Indian IT services firms soared in 2006, but signs of overly rich valuations have some investors tempering their enthusiasm in the new year. Corporate customers have flocked to offshore firms such as Cognizant Technology Services ( CTSH), Infosys Technologies ( INFY), Satyam Computer Services ( SAY) and Wipro ( WIT) for their reputation for quality work at cheaper prices, and investors, salivating over the impressive growth rates, have followed. In 2006, shares of Cognizant rose 52.3%, Infosys climbed 37.6%, Satyam shares tacked on 28.9%, and Wipro added 31.3%. In comparison, the S&P 500 rose 11.8% for the year. Observers generally remain bullish on the sector -- and they say the secular growth rate should remain intact over the long term. But starting the year, investors might want to take profits and wait for a better re-entry point. "I think the valuations are full, to say the least," says Standard & Poor's analyst Dylan Cathers. Based on his calendar 2007 estimates, Cognizant is selling for nearly 38 times earnings and both Infosys and Wipro are selling at over 30 times their earnings. Cathers has a hold rating on Cognizant, Satyam and Wipro and a sell on Infosys. He does not own shares, and his firm does not do banking. "I'm probably the only person on the planet with a sell on Infosys, but the valuations are very high," he adds.