In a report released today, James Faucette from Morgan Stanley maintained a Hold rating on Cognizant, with a price target of $80.00.
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James Faucette’s rating is based on a combination of factors, including Cognizant’s current market position and investor sentiment. While there is a general expectation that management might raise the lower end of their organic growth guidance due to strong deal momentum, there remains a cautious optimism among investors. This cautious sentiment is influenced by recent earnings reports and stock reactions from competitors like TCS and INFY, which have shown declines.
Despite the potential for upward revisions in estimates, there is a recognition that the IT services market is generally weak, with increased AI-related spending potentially crowding out other discretionary work. Additionally, while Cognizant has been aggressive in pursuing longer-duration managed services contracts and leveraging Gen AI cost savings, the overall top-line and margin upside remains uncertain. These factors contribute to the Hold rating, as investors weigh the potential for growth against the broader market challenges.
In another report released on July 16, TD Cowen also maintained a Hold rating on the stock with a $82.00 price target.