Can Cognizant's Expanding Partner Base Push the Stock Higher in 2025?

Cognizant Technology Solutions CTSH shares have gained 6.4% in the year-to-date period compared with the broader Zacks Computer & Technology sector’s return of 33.6%.The underperformance can be attributed to tight discretionary spending in manufacturing, logistics, and telecom sectors, as well as weak software spending in Europe.However, CTSH shares have outperformed the Zacks  Business - Software Services industry which have declined of 23% in the year-to-date period.CTSH is benefitting from an expanding clientele and a strong partner base. A favorable mix of business renewals and expansions of new opportunities are major drivers for Cognizant in 2025.Cognizant Technology Solutions Corporation Price and Consensus Cognizant Technology Solutions Corporation price-consensus-chart | Cognizant Technology Solutions Corporation QuoteOne notable area of strength for CTSH has been its positive momentum in the Financial Services sector, which has rebounded in recent times.In the third quarter of 2024, Financial Services inched up 0.5% in constant currency and 0.7% on a reported basis, year over year. This growth was driven by improving discretionary spending and strong demand from banking and financial services clients. The trend is expected to continue in the near term.Cognizant’s Rich Partner Base to Drive ProspectsCognizant is seeing increased client confidence in digital and cloud transformation investments, leading to expanded opportunities in the financial services sector.Building on this momentum, CTSH recently collaborated with Beyond Bank Australia, one of the country’s largest customer-owned banks. The partnership aims to transform Beyond Bank’s digital banking experience by enhancing operational resilience, streamlining processes, and improving customer satisfaction. By implementing innovative technology solutions, Cognizant will help the bank modernize its IT infrastructure, automate key processes, and leverage AI-driven insights to deliver tailored services. Cognizant’s expanding partner base, which includes ZScaler ZS, International Business Machines IBM and Palo Alto Networks PANW, is expected to drive its prospects in 2025.Cognizant recently expanded its partnership with Zscaler to help enterprises transform their security posture with an AI-enabled zero-trust cloud security platform, streamlining policy enforcement, enhancing threat detection, and reducing security complexity at scale.In the third quarter of 2024, Cognizant collaborated with Palo Alto Networks to deliver AI-driven cybersecurity solutions, enhancing security through platformization and reducing complexity for enterprises.CTSH Offers Strong GuidanceCognizant expects fourth-quarter 2024 revenues between $5 billion and $5.1 billion, indicating growth of 5.1-7.1% (an increase of 4.8% to 6.8% on a cc basis).The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $5.07 billion, indicating year-over-year growth of 6.60%.The consensus mark for earnings is pegged at $1.13 per share, which declined 4.2% over the past 30 days. The figure indicates a year-over-year decline of 4.24%.For 2024, revenues are expected to be in the range of $19.7-$19.8 billion, indicating an increase of 1.6-2.1% on a reported basis (an increase of 1.4% to 1.9% on a cc basis). Acquisitions are expected to contribute 200 bps.The Zacks Consensus Estimate for 2024 revenues is pegged at $19.72 billion, indicating year-over-year growth of 1.88%.Adjusted earnings per share for 2024 are expected to be between $4.63 and $4.67.The consensus mark for earnings is pegged at $4.66 per share, which increased 0.86% over the past 30 days. The figure implies a year-over-year increase of 2.42%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.ConclusionCognizant’s shares are cheap, as suggested by a Value Score of B.The forward 12-month Price/Sales ratio for CTSH stands at 1.90, which is lower than the industry’s 14.53.Cognizant’s strong portfolio and expanding partner base reflect solid top-line growth potential, which is expected to increase the share price in 2025.Cognizant currently carries Zacks Rank #2 (Buy), which implies that investors should accumulate the stock at current level. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free Report: 5 Clean Energy Stocks with Massive UpsideEnergy is the backbone of our economy. It’s a multi-trillion dollar industry that has created some of the world’s largest and most profitable companies.Now state-of-the-art technology is paving the way for clean energy sources to overtake “old-fashioned” fossil fuels. 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