After an preliminary droop, Cognizant Expertise Options Corp. (NASDAQ: CTSH) has come out of the COIVD-related slowdown to a big extent, making the most of the widespread digital adoption and cloud migration the market is witnessing. Whereas these tailwinds are anticipated to proceed within the coming months, the enterprise will doubtless stay beneath strain from the operational challenges posed by the disaster, particularly in markets like India the place it has a big presence.
Shares of the New Jersey-based enterprise consulting service supplier are at present buying and selling near the document highs seen just a few years in the past, after recovering from the virus-induced sell-off final 12 months. Nonetheless, they misplaced momentum after this week’s earnings launch, which may be attributed to the bigger tech sell-off. However CTSH seems to be poised to remain on the expansion path in the long run, and provides a shopping for alternative now. In the meantime, it is smart to attend for a correction earlier than investing, contemplating the comparatively excessive valuation.
The present development signifies it might take a while for the tech agency to regain the misplaced energy. However, being a number one supplier of enterprise course of outsourcing, info know-how, and consulting providers – that are in excessive demand throughout the tech house on this digitization era – its long-term prospects stay intact.
Moreover enterprise spending cuts, rising competitors and worker attrition are the primary challenges going through Cognizant at present, and the administration is taking measures to deal with them. It continues to pursue strategic acquisitions to strengthen the portfolio – the most recent being the acquisition of software firm Magenic – and put together the enterprise for the post-COVID period. The vaccination drive and market reopening ought to bolster development.
Within the first quarter of 2021, revenues rose throughout all of the enterprise segments and geographical areas, leading to a 5% enhance in whole revenues to $4.Four billion. Adjusted earnings edged up by a cent year-over-year to $0.97 per share and beat the estimates, after lacking within the earlier quarter. Anticipating that the continued momentum would proceed, the administration expects development to speed up this 12 months.
From Cognizant’s first quarter 2021 earnings convention name:
“We had a robust quarter with development throughout our payer and life sciences companies and enhancing tendencies inside our supplier enterprise. Over the previous 18 months, we’ve refreshed our product technique and higher aligned our investments with market priorities. We recalibrated our product street maps to concentrate on our core platforms and cloud enablement, buyer experiences, digital workflows, and automation. This intensified pivot to digital has resonated properly with each present shoppers and prospects, enabling us to attain double-digit development in our software program product enterprise.”
Cognizant’s stock closed the final session sharply decrease. At $75.22, the shares are nonetheless buying and selling properly above their 52-week common. They’ve gained 31% prior to now twelve months.