Barclays has adjusted its price target for Cognizant Technology Solutions (CTSH, Financial), reducing it from $103 to $90. Despite this revision, the firm maintains an Overweight rating on the stock, suggesting continued confidence in the company's potential. This adjustment comes as part of Barclays' assessment ahead of Cognizant's first-quarter earnings announcement.
The analysis highlights that demand trends for Cognizant's IT services remain relatively stable, which makes the firm optimistic about the company's ability to meet its Q1 estimates. Nonetheless, Barclays cautions investors about uncertainties driven by global tariff issues, which could introduce significant risks to projected growth in the latter half of the year.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 20 analysts, the average target price for Cognizant Technology Solutions Corp (CTSH, Financial) is $86.64 with a high estimate of $103.00 and a low estimate of $76.00. The average target implies an upside of 20.13% from the current price of $72.12. More detailed estimate data can be found on the Cognizant Technology Solutions Corp (CTSH) Forecast page.
Based on the consensus recommendation from 27 brokerage firms, Cognizant Technology Solutions Corp's (CTSH, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Cognizant Technology Solutions Corp (CTSH, Financial) in one year is $78.62, suggesting a upside of 9.01% from the current price of $72.12. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Cognizant Technology Solutions Corp (CTSH) Summary page.
CTSH Key Business Developments
Release Date: February 05, 2025
- Revenue: $5.1 billion, up 6.7% year over year in constant currency for Q4 2024.
- Full-Year Revenue: $19.7 billion, increased 1.9% year over year in constant currency.
- Adjusted Operating Margin: 15.7% for Q4 2024; full-year margin of 15.3%.
- Health Sciences Revenue Growth: Over 10% year over year.
- Financial Services Revenue Growth: Approximately 3% year over year.
- Free Cash Flow: $837 million for Q4 2024; $1.8 billion for the full year.
- Cash and Short-term Investments: $2.2 billion at year-end.
- Net Cash: $1.3 billion at year-end.
- Bookings Growth: 11% year over year for Q4 2024.
- Full-Year EPS Guidance for 2025: $4.90 to $5.06, representing 3% to 7% growth.
- Expected Revenue Growth for 2025: 2.6% to 5.1% or 3.5% to 6% in constant currency.
- Expected Adjusted Operating Margins for 2025: 15.5% to 15.7%.
- Capital Returned to Shareholders in 2024: $1.2 billion through share repurchases and dividends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cognizant Technology Solutions Corp (CTSH, Financial) reported strong year-over-year revenue growth of 6.7% in constant currency for Q4 2024, driven by large deal signings and improved organic growth.
- The company successfully completed its NextGen program, which contributed to an improved adjusted operating margin of 15.7% for the quarter.
- Cognizant Technology Solutions Corp (CTSH) expanded its AI capabilities significantly, introducing new platforms like Flowsource, Neuro Edge, and Neuro Cybersecurity, enhancing its service offerings.
- The company achieved a historic high in client satisfaction scores (NPS) in 2024, indicating strong customer relationships and service quality.
- Strategic acquisitions, such as Thirdera and Belcan, have strengthened Cognizant Technology Solutions Corp (CTSH)'s market position and contributed to its growth in new end markets.
Negative Points
- Despite the positive revenue growth, the adjusted operating margin for the year declined by 40 basis points year-over-year, primarily due to the impact of acquisitions and increased compensation costs.
- The Products and Resources segment faced pressure due to a cautious discretionary environment across end markets like automotive, aerospace, and manufacturing.
- Communication, Media, and Technology segments experienced consistent pressure as clients focused on cost optimization, impacting discretionary spending.
- The company anticipates a modest sequential margin decline in Q1 2025 due to typical seasonality, which may affect short-term profitability.
- Cognizant Technology Solutions Corp (CTSH) faces challenges in maintaining momentum in smaller deals, which are crucial for immediate revenue realization.
