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Cognizant Technology Maintains Buy Rating At Deutsche Bank

 November 03, 2011 04:16 PM

Analysts at Deutsche Bank reiterated Buy rating on the shares of Cognizant Technology Solutions Corp. (Nasdaq: CTSH) with a price target of $85. They state that they anticipate continued industry leading growth in FY 2012.

In its FY 2011 Q3, Cognizant reported net revenue of $1.601 billion, up 31.6 percent from $1.217 billion in the third quarter of 2010. GAAP net income was $227.1 million, or $0.73 per diluted share, compared to $203.7 million, or $0.66 per diluted share, in the third quarter of 2010. Diluted earnings per share on a non-GAAP basis were $0.80. GAAP operating margin for the quarter was 18.3 percent. The company's Q3 financial results beat DB analysts' estimate of $1.57 billion revenue and $0.72 per share net profit. The company issued Q4 FY 2011 guidance of at least $1,660 million, 2.8 percent quarter-on-quarter organic revenue growth, surprisingly light given Q4 FY2010 guidance of 4.4 percent quarter-on-quarter revenue growth and the recent strength in the business. Allaying concerns of a slowdown in banking and insurance, CTSH's financial services segment grew 7 percent quarter-on-quarter, from 4 percent in Q2 FY2011 on increased demand for infrastructure services, high-end BPO, and CRM work. Healthcare segment grew 11 percent Q/Q, from 4 percent in Q2 FY2011, from increased demand for cloud, mobility, and BPaaS offerings. DB analysts' expect that both segments will continue to lead growth in 2012, with demand coming from growth offerings and regulatory compliance work. Europe also held in during the quarter, growing 5.3 percent Q/Q with Continental Europe growing slightly higher than Great Britain. CTSH aired caution on new European discretionary spend, but it expects European CIOs to maintain current levels of IT services development spend in 2012.

[Related -Cognizant Technology Solutions Corp (CTSH): How Q3 Earnings Will Fare?]

[Related -Cognizant Technology Solutions Corp (CTSH): How Penetration Rates Are Faring?]


Cognizant Technology provides information technology, consulting, and business process outsourcing services in North America, Europe, and Asia. It has a market capitalization of $21.57 billion with a P/E ratio of 26.69.

Shares of Cognizant added 1.69 percent, or $1.22, to trade at $71.14.



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