Guggenheim upgrades Cognizant stock rating to Buy on expected growth

Investing.com - Guggenheim upgraded Cognizant Technology Solutions (NASDAQ:CTSH), a prominent IT services provider with $20.09 billion in annual revenue, from Neutral to Buy on Friday, setting a price target of $90.00. According to InvestingPro data, the company maintains a GOOD financial health score with strong liquidity metrics.

The upgrade comes as Guggenheim noted channel conversations indicating strength for Cognizant, contrasting with recent competitor results that highlighted a challenging demand environment. This strength is reportedly driven by new client wins and robust performance outside North America. The company’s stable performance is reflected in its consistently low price volatility, as highlighted in InvestingPro’s analysis, which includes 8 additional key insights about the company’s performance.

Guggenheim expects Cognizant to raise the midpoint of its current revenue growth outlook to between 4.5% and 6.0% year-over-year on a constant currency basis, up from the current 3.5% to 6.0% range. The firm also anticipates Cognizant will maintain its adjusted operating margin expansion of 20 to 40 basis points.

The research firm cited ongoing pyramid initiatives and other cost optimization strategies as supporting factors for Cognizant’s margin outlook. Guggenheim noted the stock is currently trading at 13.5 times its calendar year 2026 estimates, compared to the company’s three-year average two-year forward P/E multiple of 14.6 times.

The upgrade decision was further supported by what Guggenheim described as "incremental proof points of improved execution at scale" for the IT services provider.

In other recent news, Cognizant Technology Solutions has been the focus of several key developments. The company launched Agent Foundry, a platform designed to integrate AI agents into enterprise systems, enhancing business processes across multiple industries. This new offering supports various platforms and includes compliance with regulations like GDPR and HIPAA. Cognizant has also expanded its partnership with Salesforce (NYSE:CRM), introducing new services under the Agentforce platform, aimed at transforming customer and operations workflows with AI agents. This expansion has already yielded significant results, such as a 52% reduction in case cycle times for one retail client.

Additionally, Cognizant announced a change in its executive leadership, with Alina Kerdman set to succeed Robert Telesmanic as Senior Vice President, Controller, and Chief Accounting Officer upon his retirement in 2025. In the realm of analyst ratings, Evercore ISI initiated coverage on Cognizant with an Outperform rating and a $100 price target, citing the company’s strong growth potential and AI initiatives. JPMorgan also upgraded Cognizant’s stock rating to Overweight, raising the price target to $98, driven by the company’s operational performance and strategic positioning.

Both firms highlighted Cognizant’s successful execution of large deals and its improved employee retention. These developments reflect Cognizant’s ongoing efforts to enhance its market position and operational capabilities.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.