Cognizant Gains 6% in the Past Month: Should Investors Buy the Stock?

Cognizant Technology Solutions CTSH shares have gained 6.1% in the past month compared with the Zacks  Business - Software Services industry’s rise of 3.2% and the broader Zacks Computer & Technology sector’s return of 0.7%.CTSH is benefiting from expanding clientele and a strong partner base with a robust pipeline, which includes a favorable mix of business renewals and expansions of new opportunities.The positive momentum is also reflected in its impressive third-quarter 2024 financial results.  Cognizant reported revenues of $5 billion, representing a 3.5% sequential growth in constant currency and 2.7% year-over-year growth. This growth was driven by strong demand in specific sectors like health sciences and financial services.In the third quarter of 2024, Health Science increased 7.6% year over year in constant currency, fueled by strong demand in the payer, provider, and life sciences sectors.Cognizant Technology Solutions Corporation Price and Consensus Cognizant Technology Solutions Corporation price-consensus-chart | Cognizant Technology Solutions Corporation QuoteFinancial Services returned to growth, with a slight 0.5% increase in constant currency and 0.7% year over year, driven by improving discretionary spending and strong demand.Will CTSH’s Strong Partners Boost Prospects?Cognizant’s expanding partner base, which includes NVIDIA NVDA, Service Now NOW and Palo Alto Networks PANW has been noteworthy.In the third quarter of 2024, CTSH signed six deals exceeding $100 million each, highlighting its ability to win large, strategic contracts. In total, 19 large deals have been signed in the year-to-date period, outpacing the 17 deals secured in 2023.In the same quarter, CTSH announced a new collaboration with NVIDIA to enhance its data modernization offering. The collaboration will leverage the Cognizant Data and Intelligence Toolkit with the NVIDIA RAPIDS library to drive efficiency in cloud infrastructure operations and enable AI readiness.Cognizant also expanded its partnership with ServiceNow as the first partner to bring the new Workflow Data Fabric to market, unifying business and technology data for AI agents with real-time, secure access.Cognizant collaborated with Palo Alto Networks to deliver AI-driven cybersecurity solutions, enhancing security through platformization and reducing complexity for enterprises.CTSH’s Strong Portfolio Boosts ProspectCognizant is heavily investing in AI, with a commitment of $1 billion to enhance platforms and capabilities. This investment reflects the company’s focus on leading in the rapidly evolving digital landscape.In the third quarter of 2024, the company made significant progress in AI and automation, particularly through its Neuro IT Ops, Flowsource, and AI-driven platforms, which helped improve productivity and lower costs for clients, including in high-value areas like software development and IT operations.Further expanding its portfolio, in October, Cognizant announced the launch of Cognizant Neuro Cybersecurity, a platform designed to enhance cybersecurity resilience by integrating and orchestrating various point solutions across the enterprise for improved decision-making and threat management. The launch underscores Cognizant’s commitment to bolstering its client’s digital security amid growing cyber threats.Acquisitions have also played an important role in driving CTSH’s top-line growth. CTSH benefited from recent acquisitions, including Belcan, which contributed approximately 150 basis points to revenue growth in the third quarter of 2024. Belcan’s integration enhanced CTSH’s presence in aerospace and defense and expanded its access to the ER&D services market, projected to outpace legacy IT services.CTSH Initiates Strong 2024 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%.ConclusionCognizant’s shares are cheap as suggested by a Value Score of B.The forward 12-month Price/Sales ratio for CTSH stands at 2.03, lower than the industry’s 12.16.Cognizant currently carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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 Cognizant Technology Solutions Corporation (CTSH): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report ServiceNow, Inc. (NOW): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks