Cognizant Technology Solutions Corp. (CTSH): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Summary:
Cognizant reported mixed fourth-quarter results. Earnings beat the Zacks Consensus Estimate by $0.07, while revenues were in-line with the same. The company reiterated its full year guidance primarily based by strong demand environment. Although Cognizant continues to face significant competition in most of its operating markets, we believe that the company remains well diversified in key verticals and emerging markets of social, mobile, analytics and cloud, which will continue to boost its top line. Nevertheless, increasing head count may hurt profitability in the near-term. Tight IT spending is also expected to hurt Cognizant's top-line for the rest of 2014. Thus, we maintain our Neutral recommendation and set a price target of $49.00.

Overview:

Headquartered in Teaneck, New Jersey, Cognizant Technology Solutions Corporation CTSH is a leading provider of information technology IT for Fortune 1000 customers. The company was spun off from Dun & Bradstreet in 1996, went public in June 1998 and subsequently became a majority-owned subsidiary of IMS Health. The core competencies include Technology Strategy Consulting, Complex Systems Development, Enterprise Software Package Implementation and Maintenance, Data Warehousing and Business Intelligence, Application Testing, Application Maintenance, Infrastructure Management, and Vertically-Oriented Business Process Outsourcing (V-BPO).

The company operates through two segments Application Management and Application Development. The former usually undertakes long-term projects, providing recurring and predictable revenue, while the latter is more discretionary and sensitive to changing economic conditions.


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