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On Thursday, TD Cowen analyst Bryan Bergin updated the financial outlook for Cognizant Technology Solutions (NASDAQ:CTSH), increasing the price target to $80 from the previous $78, while keeping the stock’s rating at Hold. The adjustment comes amid signs of a gradual recovery for the company, as noted by Bergin in his analysis. With a market capitalization of $41.45 billion and trading near its 52-week high of $83.97, Cognizant has shown resilience in the market. According to InvestingPro analysis, the stock appears to be slightly undervalued based on its Fair Value metrics.
Bergin’s commentary highlighted the evidence of Cognizant’s recovery, although he pointed out that the pace remains measured. He mentioned that the company’s guidance is varied, with the first quarter being in line with expectations and the midpoint revenue forecast for the fiscal year 2025 slightly below by 1.4%. However, earnings per share (EPS) projections are in line, benefiting from improvements in Adjusted Operating Margin (AOM) by 20 to 40 basis points. InvestingPro data reveals the company maintains strong financial health with a P/E ratio of 18.53 and generates substantial revenue of $19.41 billion. InvestingPro subscribers can access 8 additional key tips about Cognizant’s financial position and market outlook.
The analyst also observed that Cognizant’s booking upside was driven by large deals and better annual contract value (ACV), with low to mid-single-digit growth, as discretionary spending begins to pick up. Bergin concluded that while Cognizant is moving in the right direction, more evidence of growth recovery is needed to narrow the multiple gap. The industry awaits further insights from the upcoming Investor Analyst Day (IA Day).
Cognizant has been working towards a turnaround, and the latest price target revision by TD Cowen reflects a cautiously optimistic view of the company’s progress. Bergin’s comments suggest that while positive developments are occurring, investors are looking for more consistent signs of growth before a more bullish stance can be justified.
In other recent news, Cognizant Technology Solutions has reported strong fourth-quarter results, surpassing analyst expectations on both earnings and revenue. The IT services company posted adjusted earnings per share of $1.21, beating the analyst consensus of $1.12, and reported revenue of $5.08 billion, up 6.8% year-over-year. These results were driven by a period of strong bookings and significant deal wins, which are expected to support growth in the company’s Outsourcing services in 2025.
However, the company’s revenue guidance for 2025 has been viewed as slightly conservative. As a result, both Jefferies and Needham have adjusted their revenue estimates downwards, while maintaining their respective Buy and Hold ratings on Cognizant’s stock. Jefferies has increased its stock price target to $100, reflecting confidence in Cognizant’s ability to sustain growth and capitalize on its recent large deal wins.
The company also announced a 3% increase to its quarterly cash dividend, raising it to $0.31 per share. Despite the conservative outlook, these recent developments highlight a potential for continued growth in Cognizant’s operations. However, investors and analysts will continue to monitor the company’s performance closely in the coming periods.
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