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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Cognizant Technology Solutions    CTSH

COGNIZANT TECHNOLOGY SOLUTIONS

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Cognizant profit beats view; flags future softness in banking

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07/31/2019 | 06:53pm EDT
The Cognizant logo is seen at the SIBOS banking and financial conference in Toronto

(Reuters) - Cognizant Technology Solutions Co beat quarterly profit estimates on Wednesday, bolstered by demand in its financial services unit, but flagged lower spending at some major banking clients in the second half of the year.

Shares of the company, which initially rose almost 4% after results, pared some gains and were trading at $67.

"We anticipate some cautiousness in overall levels of spend in the banking sector in the second half of the year due to weakness in capital markets across banking, M&A activity with the U.S. regional banks and weak macro factors," Chief Financial Officer Karen McLoughlin said on a conference call.

Revenue from its financial services segment, which accounts for more than a third of its total revenue, rose to $1.47 billion in the latest quarter, brushing past estimates of $1.46 billion. Cognizant has seen some sluggish spending in the financial sector over the past few quarters and its reliance on the industry has been hurting its overall revenue growth.

Revenue from its second largest sector, healthcare services, fell 1.9% to $1.13 billion.

McLoughlin said the decline in healthcare was largely the result of several large clients involved in mergers.

The company competes with Accenture as well as major Indian IT companies Tata Consultancy Services, Wipro and Infosys.

The results were a relief for some investors after Cognizant posted lower first-quarter profit and cut its 2019 revenue outlook.

Wedbush analyst Moshe Katri called Wednesday's results "a relief rally post-last quarter's disaster results".

The company expects current-quarter revenue to be between $4.23 billion to $4.27 billion, above the average analyst estimate of $4.2 billion, according to IBES data from Refinitiv.

The consulting and outsourcing services provider reported net income of $509 million, or 90 cents per share, in the second quarter ended June 30, up from $456 million, or 78 cents per share, a year earlier.

Excluding items, the company earned 94 cents per share, above estimates of 92 cents.

The company reported an operating margin of 14.9%, compared with 16.7% in the year-ago quarter. It expects to slow the pace of hiring to help lower costs for the rest of the year.

Revenue rose 3.4% to $4.14 billion, in-line with analysts' average estimate of $4.14 billion, according to IBES data from Refinitiv.

(Reporting by Vibhuti Sharma in Bengaluru; Editing by Bernard Orr)

Stocks mentioned in the article
ChangeLast1st jan.
ACCENTURE 0.62% 184.97 Delayed Quote.31.18%
COGNIZANT TECHNOLOGY SOLUTIONS 1.35% 60.61 Delayed Quote.-4.52%
INFOSYS LIMITED 4.05% 814.8 End-of-day quote.18.83%
TATA CONSULTANCY SERVICES -0.88% 1986.85 End-of-day quote.5.88%
WIPRO LIMITED 0.10% 239.45 End-of-day quote.-3.60%
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Financials (USD)
Sales 2019 16 694 M
EBIT 2019 2 807 M
Net income 2019 2 107 M
Finance 2019 2 841 M
Yield 2019 1,33%
P/E ratio 2019 16,2x
P/E ratio 2020 14,2x
EV / Sales2019 1,84x
EV / Sales2020 1,69x
Capitalization 33 474 M
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Technical analysis trends COGNIZANT TECHNOLOGY SOLUT
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Income Statement Evolution
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Mean consensus HOLD
Number of Analysts 31
Average target price 69,23  $
Last Close Price 60,61  $
Spread / Highest target 33,6%
Spread / Average Target 14,2%
Spread / Lowest Target -1,01%
EPS Revisions
Managers
NameTitle
Brian J. Humphries Chief Executive Officer & Director
Michael Patsalos-Fox Chairman
Srinivasan Veeraraghavachary Chief Operating Officer
Karen McLoughlin Chief Financial Officer
John E. Klein Director
Sector and Competitors
1st jan.Capitalization (M$)
COGNIZANT TECHNOLOGY SOLUTIONS-4.52%33 474
INTERNATIONAL BUSINESS MACHINES CORPORATION25.59%126 468
ACCENTURE31.18%117 852
TATA CONSULTANCY SERVICES5.88%105 105
AUTOMATIC DATA PROCESSING23.95%70 485
INFOSYS LIMITED18.83%48 686