Cognizant Technology Solutions Corporation (CTSH), with a market cap of $34.2 billion, is a leading professional services company based in Teaneck, New Jersey. Specializing in digital solutions, it caters to sectors including Financial Services, Healthcare, Products & Resources, and Communications, Media & Technology.
Shares of the information technology company have significantly underperformed the broader market over the past 52 weeks. CTSH has gained 13.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 29.5%. In 2024, shares of CTSH are down 7.1%, compared to SPX's 11.6% gains on a YTD basis.
Zooming in further, CTSH also lagged behind the Information Technology ETF Vanguard’s (VGT) 38.5% gains over the past 52 weeks and a 11.1% YTD rise.
Cognizant Technology's underperformance could be attributed to intense competition, slower growth in digital services, and operational inefficiencies. Shares of Cognizant dipped briefly but surged in the subsequent trading session after a strong Q1 earnings report on May 1, buoyed by consistent client spending. Improving business conditions and anticipated interest rate cuts spurred clients to increase investments in technology and consulting services, benefiting Cognizant.
For the current fiscal year, ending in December, analysts expect CTSH to report EPS growth of 1.1% to $4.60 on a diluted basis. Moreover, the company has a promising earnings surprise history, surpassing the consensus estimate in each of the last four quarters.
Among the 25 analysts covering the stock, the consensus rating is a “Hold.” That’s based on five “Strong Buys,” 18 “Holds,” one “Moderate Sell,” and one “Strong Sell.”
This configuration has been consistent over the past months. However, it is slightly less bullish than three months before, with six “Strong Buy” ratings.
On May 2, Susquehanna reduced their target price on CTSH shares to $78 and assigned a "Neutral" rating. That implies a potential upside of 13.3% from the current price levels.
The mean price target of $75.76 represents a premium of 10% to CTSH's current levels. The Street-high price target of $91 implies a potential upside of 32.2% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
