Cognizant Technology Solutions
CTSH
is continuing with its strategic acquisition strategy to benefit its top-line growth in the coming quarters.
The company announced that it has entered into an agreement to acquire Houston-based Utegration LLC, a full-service consulting and solutions provider specializing in
SAP
’s
SAP
technology and SAP-certified products for the energy and utilities sectors.
Utegration has been a strategic partner of SAP in the utilities sector for over a decade, helping SAP to implement its software across its customers’ operating systems.
The recent partnership with Utegration will help Cognizant to further benefit from the digital transformation megatrend and further increase market share in the energy and utilities sectors. The partnership will also help in implementing its SAP fintech solutions for its new clients.
Cognizant Technology Solutions Corporation Price and Consensus
Cognizant Technology Solutions Corporation price-consensus-chart
|
Cognizant Technology Solutions Corporation Quote
Cognizant Driving Prospects With Acquisition and Partnership Strategy
Cognizant shares have outperformed the broader Zacks
Computer & Technology
sector year to date. While CTSH shares have declined 33.2%, the sector has fallen 33.5% over the same time frame.
Revenue-accretive acquisitions and an expanding partner base that includes the likes of
Microsoft
MSFT
and
Qualcomm
QCOM
have been key catalysts. Acquisitions have been an integral part of Cognizant’s growth story in recent years.
Cognizant recently entered into an agreement to acquire Dallas, TX-based consultancy services firm, AustinCSI. The deal, upon completion, will strengthen Cognizant’s footprint across the telecommunications, media, technology and automotive sectors.
In the third quarter of 2022 (quarter ended Sep 30), acquisitions contributed 40 basis points (bps) of year-over-year revenue growth of 2.4% or 5.6% at constant currency (cc).
Cognizant reported third-quarter 2022 revenues of $4.86 billion, which missed the Zacks Consensus Estimate by 2.94%. The reported figure was within management’s revenue guidance of $4.90-$4.94 billion.
The year-over-year top-line growth was led by digital revenues, which accounted for 51% of revenues and increased 7% year over year. However, Cognizant, which currently carries a Zacks Rank #4 (Sell), experienced a slowdown in digital revenue growth due to forex headwinds and elevated attrition, particularly in Europe. The divestiture of the Samlink subsidiary hurt revenue growth by 60 bps.
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Nevertheless, Cognizant continues to benefit from an expanding clientele. In third-quarter 2022, clients added over the past year contributed $96 million in revenues.
Cognizant was recently selected by VodafoneZiggo as its managed services partner to consolidate and support its operations of IT and virtualized mobile network infrastructure. VodafoneZiggo, which is a 50:50 joint venture between Liberty Global and Vodafone Group, currently serves more than five million mobile business and consumer customers in the Netherlands.
Moreover, Cognizant recently announced the expansion of its partnership with Microsoft. The two companies recently showcased a new solution — the Cognizant Sustainability Accelerator, powered by the Microsoft Cloud and Microsoft Cloud for Sustainability — at COP27. The solution combines Cognizant’s deep experience in IoT and data analytics with Microsoft’s cloud capabilities.
Cognizant also expanded its collaboration with Qualcomm to accelerate enterprise digital transformation through a new 5G experience center in Atlanta, GA. The collaboration combines Cognizant’s expertise in 5G, IoT, cloud and data analytics with Qualcomm’s intelligent edge devices, AI and 5G connectivity solutions.
Cognizant expects to report fourth-quarter revenues between $4.72 billion and $4.77 billion, indicating growth of 2-3% on a cc basis. For 2022, revenues are now expected to be $19.3 billion, indicating an improvement of 7% on a cc basis, reflecting robust contributions from acquisitions and a strong partner base.
The Zacks Consensus Estimate for Cognizant’s 2022 revenues is pegged at $19.99 billion, indicating growth of 3.38% from the figure reported in 2021. The consensus mark for 2022 earnings is pegged at $4.70, up 5.52% over the past 30 days.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
