Cognizant Technology Solutions Corp. (CTSH): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Cognizant reported strong fourth-quarter 2014 results with both top line and bottom line surpassing the Zacks Consensus Estimate. Increased IT spending was a key factor driving the results. Cognizant is expected to continue to benefit from strong demand for high quality, lower cost technology services. Based on its global delivery model and expanding capacity in low-cost areas in India, China, Philippines and Latin America, the company remains well-positioned in the outsourcing market. Additionally, growing demand for offshoring services beyond the traditional IT outsourcing namely, BPO, KPO and IT infrastructure services bode well for the company over the long term. We reaffirm our Outperform recommendation and set a price target of $66.00.


Headquartered in Teaneck, NJ, Cognizant Technology Solutions Corp (CTSH) is a leading provider of information technology, consulting and business process outsourcing services. The company was spun off from Dun & Bradstreet in 1996 and went public in Jun 1998.

Cognizant primarily serves four domains: Financial Services, Healthcare, Manufacturing, Retail and Logistics and Other (includes Communications, Information, Media & Entertainment and High Technology).

Its solutions and services segment includes Consulting and Technology services and Systems Integration and Outsourcing services. Consulting and Technology services comprise of Business, Process, Operations and IT Consulting, Application Development & Systems Integration and Application Testing. Outsourcing services include Application Maintenance, IT Infrastructure Services and Business Process Services.

Cognizant reported revenues of $8.84 billion in 2013. The company reports operations under four segments: Financial Services (42% of 2013 revenues), Healthcare (25.6% of revenues), Manufacturing, Retail and Logistics (21.1% of revenues) and Other (11.2% of revenues).

The company's majority development, delivery centers and technical professionals are located in India. Cognizant also has facilities in Europe, Asia Pacific, the Middle East and Latin America. As of Dec 31, 2013, Cognizant had approximately 1,197 clients.

Cognizant faces significant competition from the likes of Accenture, Capgemini, Computer Sciences Corp, Genpact, HCL Technologies, HP Enterprise, IBM Global Services, Infosys Technologies, Tata Consultancy Services, Wipro and numerous local providers.

In Feb 2014, Cognizant declared a two-for-one stock split of Class A common stock in the form of a 100% stock dividend, which was paid on Mar 7.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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