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On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook for Cognizant Technology Solutions (NASDAQ:CTSH), increasing the price target to $87 from $84 while maintaining a Neutral rating on the stock. The IT services giant, currently valued at $43.2 billion, has seen its shares surge 13.25% year-to-date and is trading near its 52-week high of $87.61. The adjustment follows Cognizant’s announcement of its fourth-quarter 2024 results, which showed a continuation of positive growth in the company’s two largest segments and a fourth consecutive quarter of acceleration in total organic constant currency (CC) year-over-year growth, now at 2.2%.According to InvestingPro data, nine analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s trajectory.
Despite the positive aspects of the quarterly report, Mizuho voiced concerns over the company’s moderate growth forecast, indicating a 2.3% guidance for 2025 organic CC growth. This guidance aligns with the company’s recent performance, as InvestingPro data shows revenue growth of 1.98% over the last twelve months. This figure suggests a cautious outlook on the speed of Cognizant’s business turnaround, particularly when considering tougher comparisons in the second half of 2025 in the Financial Services (FS) and Healthcare Services (NASDAQ:HCSG) (HS) segments.
In response to Cognizant’s earnings report and future expectations, Mizuho has revised its revenue estimates downward. However, the firm has increased its adjusted earnings per share (EPS) estimates for 2025 and 2026, citing an improved outlook for adjusted operating margins. This has led to the new price target of $87, reflecting a modest increase from the prior target.
Cognizant’s efforts to enhance efficiency and foster growth were acknowledged, but Mizuho suggests that the company’s growth trajectory indicates a more extended period may be required for the turnaround to fully materialize. The updated price target and maintained Neutral rating reflect Mizuho’s measured stance on Cognizant’s stock, considering the company’s current performance and future guidance.
In other recent news, Cognizant Technology Solutions reported strong fourth-quarter results, exceeding analyst expectations with adjusted earnings per share of $1.21 and revenue of $5.08 billion. However, the company issued a mixed outlook for 2025, forecasting revenue between $20.3 billion and $20.8 billion, slightly short of analyst expectations. Despite this, Cognizant’s adjusted EPS guidance of $4.90 to $5.06 aligns with the consensus estimate.
Following these developments, TD Cowen, Jefferies, and Needham provided their analysis. TD Cowen analyst Bryan Bergin maintained a Hold rating on Cognizant’s stock, raising the price target to $80. Jefferies, on the other hand, maintained a Buy rating and increased the price target to $100. Needham reiterated a Hold rating on the company’s stock, noting the company’s strong finish to the fiscal year 2024, but also highlighting a conservative outlook for 2025.
These recent developments reflect Cognizant’s recovery and potential for growth, as indicated by positive fourth-quarter results and strong bookings. However, analysts have expressed caution due to the company’s conservative revenue forecast for 2025.
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