Cognizant Technology Solutions CTSH is benefiting from an expanding partner base, which includes the likes of Gentherm THRM, Alphabet’s GOOGL cloud business Google Cloud and Victory Capital Holdings VCTR.
It recently celebrated the success of its three-year partnership with the Aston Martin Aramco Formula One Team at a special event held at its MEPZ campus in Chennai.
The event featured the presence of two-time Formula One World Champion Fernando Alonso, who engaged with Cognizant’s leadership team and associates.
Will CTSH’s Strong Partners Boost Prospects?
Cognizant is benefiting from an expanding clientele and strong partner base with a robust pipeline, which includes a favorable mix of business renewals and expansions of new opportunities.
Cognizant Technology Solutions Corporation Price and Consensus
Cognizant Technology Solutions Corporation price-consensus-chart | Cognizant Technology Solutions Corporation Quote
In second-quarter 2024, CTSH maintained its momentum by securing large contracts, signing five agreements with a total contract value (TCV) of $100 million or more. In the first half of 2024, the company completed 13 such deals, significantly surpassing its pace from 2023.
In the second quarter, Cognizant launched its first set of healthcare large language model (LLM) solutions on Alphabet’s cloud business Google Cloud’s generative AI technology, targeting high-cost workflows in marketing operations, call center operations and provider management.
In the same quarter, CTSH secured an agreement to deliver engineering services to Gentherm, enhancing its capabilities in innovative thermal management technologies for the automotive and medical sectors.
Cognizant also signed a five-year strategic agreement with Victory Capital Holdings to provide IT infrastructure, security and data & analytics support for its next phase of digital transformation.
Cognizant’s Q3 Outlook Looks Dull
Despite an expanding portfolio and a strong partner base, weakness in the Financial Services segment negatively impacted Cognizant’s top line.
In second-quarter 2024, revenues of $4.85 billion saw a year-over-year decline of 0.7% and 0.5% at constant currency (cc). The Financial Services revenues dropped 1.1% year over year to $1.447 billion during this period.
The company’s shares have inched up 0.8% against the Zacks Computer & Technology sector’s growth of 22.2% year to date.
Cognizant expects third-quarter 2024 revenues to be between $4.89 billion and $4.96 billion, indicating a decline of 0.2% to an increase of 1.3% (an increase of 1.5% on a cc basis).
The Zacks Consensus Estimate for third-quarter revenues is pegged at $5 billion, indicating year-over-year growth of 2.13%.
The consensus mark for earnings is pegged at $1.15 per share, declined by a penny in the past 30 days.
Conclusion
Cognizant’s strong portfolio, along with an expanding partner base, indeed reflects solid top-line growth potential over the long run.
However, in the Financial Services segment, Cognizant continues to expect the challenging macro environment to hurt spending rates, which makes Cognizant a risky bet.
Cognizant currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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