Shares of professional services company Cognizant (NASDAQ:CTSH) are nosediving today after an unimpressive third-quarter showing and major analyst downgrades.
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The IT major’s revenue increased by 2.5% year-over-year to $4.86 billion but missed the cut by $140 million. EPS at $1.17, on the other hand, came in ahead of expectations by $0.01. Additionally, the company increased its stock buyback program by $2 billion.
Nonetheless, CTSH’s top brass noted that top line and bookings came in below expectations as fulfillment challenges were exacerbated by uncertain macroeconomic conditions. Further, bookings during the quarter dropped by 2% as compared to the year-ago period.
CTSH now expects fourth-quarter revenue to land between $4.72 billion and $4.77 billion. This indicates a drop of 0.2% to 1.2%. Revenue for the full-year 2022 is anticipated at $19.3 billion.
In response to this performance, UBS’ Rayna Kumar has lowered the price target on CTSH to $62 from $76 while maintaining a Hold rating.
BMO Capital’s Keith Bachman too has lowered the price target on the stock to $65 from $73 while also slashing the rating to a Hold from a Buy.
The analyst expects 2023 to be a tough year for the IT space and adds that while CTSH is inexpensive at current levels, there seems to be no catalyst in the short term for the stock.
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