Cognizant Technology Solutions Corporation
) is expected to report revenues of approximately $1.875 billion
in the third quarter of 2012. EPS is estimated to be 86 cents in
third quarter 2012. Excluding stock-based compensation expense,
EPS is forecasted at 92 cents in the third quarter of 2012.
For the full year 2012, Cognizant expects revenues to increase
at least 20% annually to $7.34 billion. The company witnessed a
modest rebound in banking services and remains optimistic for the
remainder of the year.
The growth for the remainder of 2012 will come from the ramp
up in client acquisitions over the last few months, including ING
U.S., Philips and others. Europe remains an attractive market in
the long term and the company continues to focus heavily on
building its front-end capability, particularly in France and
Germany where it continues to see an increasing number of
Although the economic uncertainty continues to limit spending,
management continues to see an upside in pipeline as clients look
for ways to run their business more efficiently. In addition,
Cognizant continues to see a shift in business mix from
discretionary projects to larger end-to-end outsourcing
EPS is likely to be $3.38 for 2012, up from the previous
estimate of $3.36. Excluding stock-based compensation expense,
EPS is forecasted at $3.64, up from the earlier forecast of
Meanwhile, earnings estimates for the third quarter and full
year 2012 have been more or less static in the last few days with
no movement in either direction. For 2013, earnings estimates
have moved up marginally.
Earlier, the company posted an EPS of 82 cents in the second
quarter of 2012, beating the Zacks Consensus Estimate by 2 cents.
Cognizant reported revenues of $1.795 billion in the second
quarter of 2012, up 20.9% year over year and 4.9%
Cognizant has always set a robust tone in terms of growth
prospects compared to its competitors,
However, the global economic environment remains uncertain as
volatility in Europe persists. Moreover, both developed and
developing economies have lowered their GDP forecasts, which
along with a looming fiscal cliff in the United States prompt a
cautious investment environment.
We continue to maintain a Neutral recommendation on Cognizant
in the long run. Nevertheless, the company has a Zacks #2 Rank,
which translates into a short-term rating of Buy.
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