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Cognizant Technology Solutions (CTSH)
:CTSH
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Cognizant (CTSH) AI Stock Analysis

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CTSH

Cognizant

(NASDAQ:CTSH)

Rating:78Outperform
Price Target:
$92.00
▲(19.99%Upside)
Cognizant's strong financial performance and positive outlook from the earnings call are significant factors in the stock's score. While the technical analysis suggests some caution due to potential bearish momentum, the company's strategic focus on AI and robust financial health provide a solid foundation for future growth. The valuation is fair, offering moderate growth potential with income from dividends.
Positive Factors
AI Initiatives
Progress from internal AI initiatives with around 20% of software code AI-generated contributes to improving organic growth trends.
Deal Momentum
Strong deal momentum continues, signing ten deals in 4Q24 with a total contract value of USD100mn or more.
Earnings
Cognizant reported first-quarter results and second-quarter guidance that beat Street expectations and reiterated full year 2025 guidance on a constant-currency basis.
Negative Factors
Client Decision Slowdown
A slowdown in client decision-making and discretionary spend began due to macroeconomic factors.
Financial Services Downturn
Continuous downturn in the financial services segment poses a risk due to decreased discretionary spending on small deals.
Macroeconomic Risks
The potential global recession could disrupt business activities, potentially leading to layoffs and impacting growth.

Cognizant (CTSH) vs. SPDR S&P 500 ETF (SPY)

Cognizant Business Overview & Revenue Model

Company DescriptionCognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services in North America, Europe, and internationally. It operates through four segments: Financial Services; Healthcare; Products and Resources; and Communications, Media and Technology. The company offers customer experience enhancement, robotic process automation, analytics, and AI services in areas, such as digital lending, fraud detection, and next generation payments; the shift towards consumerism, outcome-based contracting, digital health, delivering integrated seamless, omni-channel, and patient-centered experience; and services that drive operational improvements in areas, such as clinical development, pharmacovigilance, and manufacturing, as well as claims processing, enrollment, membership, and billing to healthcare providers and payers, and life sciences companies, including pharmaceutical, biotech, and medical device companies. It also provides solution to manufacturers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services; and digital content, the creation of personalized user experience, and acceleration of digital engineering services to information, media and entertainment, and communications and technology companies. The company was founded in 1994 and is headquartered in Teaneck, New Jersey.
How the Company Makes MoneyCognizant makes money primarily through providing IT services, consulting, and business process outsourcing. Its revenue model is largely driven by long-term contracts with clients across various industries, including healthcare, financial services, and manufacturing. The company earns revenue by delivering digital solutions, application development and management, systems integration, and consulting services. Additionally, Cognizant generates income through strategic partnerships and collaborations to enhance its service offerings and expand its market reach. The company's earnings are influenced by global digital transformation trends and the increasing demand for technology-driven business solutions.

Cognizant Key Performance Indicators (KPIs)

Any
Any
Revenue by Service Line
Revenue by Service Line
Analyzes income from various service offerings, highlighting which areas drive growth and profitability, and where the company is focusing its strategic efforts.
Chart InsightsCognizant's Consulting and Technology services are experiencing a resurgence, with recent quarters showing strong growth, likely bolstered by strategic acquisitions and AI investments. Outsourcing Services, while stable, faces pressure from discretionary spending cuts, particularly in the Products and Resources segment. Despite a slowdown in client decision-making, the company's robust backlog and AI-driven productivity initiatives signal resilience. The earnings call highlights optimism for continued growth, albeit tempered by macroeconomic uncertainties impacting client budgets.
Data provided by:Main Street Data

Cognizant Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 4.61%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
Cognizant Technology Solutions reported strong revenue growth and positive performance in key segments like Health Sciences and Financial Services. The company is benefiting from strategic investments in AI and technology, as well as strong bookings and a healthy pipeline. However, there is some concern about the slowdown in client decision-making and discretionary spending, particularly in April. Despite these challenges, the company's overall outlook remains positive.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
First quarter revenue grew by 8.2% year-over-year in constant currency to $5.1 billion, driven by the Belcan acquisition and organic growth in Health Sciences and Financial Services.
Health Sciences and Financial Services Performance
Health Sciences led revenue growth with over 11% increase year-over-year in constant currency. Financial Services segment grew 6.5% year-over-year in constant currency.
Adjusted Operating Margin Improvement
Adjusted operating margin of 15.5% improved by 40 basis points year-over-year.
Earnings Per Share Growth
Adjusted EPS grew 10% year-over-year, marking the sixth consecutive quarter of year-over-year growth.
AI and Technology Investments
The company is heavily investing in AI-powered software, with 1,400 early GenAI engagements and numerous partnerships with companies like NVIDIA to accelerate AI adoption.
Strong Bookings and Pipeline
On a trailing 12-month basis, bookings grew 3% year-over-year to $26.7 billion, representing a 1.3x book-to-bill ratio.
Negative Updates
April Slowdown in Decision-Making
In April, the company began to see some slowdown in client decision-making and discretionary spending, particularly in health sciences and products and resources segments.
Discretionary Spending Pressure
Products and Resources segment faced weak demand due to discretionary spending pressure and impacts from changes in tariff policies.
Bookings Decline
First quarter bookings declined 7% year-over-year, driven by a decline in the rest of the world region.
Company Guidance
During the Cognizant Technology Solutions Q1 2025 earnings call, the company provided optimistic guidance based on several key metrics. Revenue for the first quarter grew by 8.2% year-over-year in constant currency to $5.1 billion, driven significantly by the Belcan acquisition and organic growth in Health Sciences and Financial Services. Health Sciences saw an impressive 11% year-over-year increase, while Financial Services grew by 6.5%. The adjusted operating margin improved by 40 basis points to 15.5%, and adjusted EPS grew by 10% year-over-year. The company reported a healthy book-to-bill ratio of 1.3x on a trailing 12-month basis, indicating a robust backlog. Additionally, Cognizant highlighted its focus on AI-led productivity, with AI-written code comprising over 20% of their output, and noted that they are currently engaged in approximately 1,400 early GenAI projects. For the full year 2025, the company expects revenue growth of 3.5% to 6% in constant currency, despite acknowledging macroeconomic uncertainties that have impacted client decision-making and discretionary spending.

Cognizant Financial Statement Overview

Summary
Cognizant exhibits strong financial health with consistent revenue growth, strong profitability margins, a solid balance sheet with low leverage, and robust cash flow generation. The company has shown operational efficiency with strong EBIT and EBITDA margins. However, maintaining revenue growth momentum will be crucial to sustain its financial performance.
Income Statement
85
Very Positive
Cognizant has shown consistent revenue growth, with a TTM revenue of $20.09 billion compared to $19.74 billion in the previous year, marking a growth rate of 1.8%. The gross profit margin stands at 32.95%, indicating efficient cost management. Net profit margin has also remained strong at 11.73%, reflecting solid profitability. The EBIT and EBITDA margins are robust at 15.33% and 16.13%, respectively, showcasing operational efficiency.
Balance Sheet
78
Positive
The balance sheet reveals a strong equity position with a debt-to-equity ratio of 0.08, suggesting low leverage and financial stability. The return on equity (ROE) is a healthy 15.82%, indicating effective use of equity to generate profits. The equity ratio is 74.60%, highlighting a strong capital structure with significant equity backing.
Cash Flow
80
Positive
Cognizant's cash flow is robust, with a TTM operating cash flow of $2.43 billion translating to an operating cash flow to net income ratio of 1.03. The free cash flow growth rate has been 16.77% year-over-year, demonstrating strong cash generation. The free cash flow to net income ratio of 0.90 reflects solid conversion of profits into cash.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue19.74B19.35B19.43B18.51B16.65B
Gross Profit6.78B6.69B6.98B6.90B5.98B
EBITDA3.52B3.35B3.60B3.41B2.68B
Net Income2.24B2.13B2.29B2.14B1.39B
Balance Sheet
Total Assets19.97B18.48B17.85B17.85B16.92B
Cash, Cash Equivalents and Short-Term Investments2.24B2.63B2.50B2.72B2.72B
Total Debt1.50B1.31B1.53B1.64B1.76B
Total Liabilities5.56B5.26B5.54B5.86B6.09B
Stockholders Equity14.41B13.23B12.31B11.99B10.84B
Cash Flow
Free Cash Flow1.83B2.01B2.24B2.22B2.90B
Operating Cash Flow2.12B2.33B2.57B2.50B3.30B
Investing Cash Flow-1.65B-331.00M-106.00M-2.16B-1.24B
Financing Cash Flow-915.00M-1.61B-1.94B-1.20B-2.01B

Cognizant Technical Analysis

Technical Analysis Sentiment
Negative
Last Price76.67
Price Trends
50DMA
78.81
Negative
100DMA
77.25
Negative
200DMA
78.26
Negative
Market Momentum
MACD
-0.66
Negative
RSI
46.44
Neutral
STOCH
80.20
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CTSH, the sentiment is Negative. The current price of 76.67 is below the 20-day moving average (MA) of 77.46, below the 50-day MA of 78.81, and below the 200-day MA of 78.26, indicating a bearish trend. The MACD of -0.66 indicates Negative momentum. The RSI at 46.44 is Neutral, neither overbought nor oversold. The STOCH value of 80.20 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CTSH.

Cognizant Risk Analysis

Cognizant disclosed 14 risk factors in its most recent earnings report. Cognizant reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Cognizant Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$37.82B16.1516.61%1.59%4.09%14.05%
77
Outperform
$175.46B22.7727.27%2.09%6.21%14.87%
75
Outperform
$74.61B22.8730.46%2.92%4.52%-0.22%
74
Outperform
$9.57B23.6211.57%4.72%-3.06%
72
Outperform
$27.41B22.18113.19%5.99%59.74%
71
Outperform
$31.71B22.5216.50%0.29%-1.95%62.75%
63
Neutral
$34.70B5.15-11.38%1.67%5.54%-17.15%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CTSH
Cognizant
76.67
3.25
4.43%
ACN
Accenture
283.15
-37.15
-11.60%
EPAM
Epam Systems
170.74
-39.30
-18.71%
IT
Gartner
356.64
-114.20
-24.25%
INFY
Infosys
17.37
-4.75
-21.47%
WIT
Wipro
2.93
-0.12
-3.93%

Cognizant Corporate Events

Shareholder Meetings
Cognizant Shareholders Re-elect Directors, Approve Proposals
Neutral
Jun 6, 2025

On June 3, 2025, Cognizant held its annual meeting of shareholders, where all directors were re-elected, and proposals on executive compensation and the appointment of an independent accounting firm were approved. However, a shareholder proposal regarding the improvement of special shareholder meetings was not approved, indicating a mixed reception to governance changes among stakeholders.

The most recent analyst rating on (CTSH) stock is a Buy with a $90.00 price target. To see the full list of analyst forecasts on Cognizant stock, see the CTSH Stock Forecast page.

Executive/Board Changes
Cognizant Announces Leadership Transition with New CAO
Neutral
May 28, 2025

Cognizant Technology Solutions Corporation announced that Robert Telesmanic will retire from his role as SVP, Controller and Chief Accounting Officer effective July 1, 2025. Alina Kerdman, who has been with the company since 2010, will succeed him in this role. Kerdman will receive a comprehensive compensation package, including a base salary, cash incentives, and stock units, as she transitions into her new position. Telesmanic will remain with the company as a special advisor until the end of 2025 to ensure a smooth transition.

The most recent analyst rating on (CTSH) stock is a Buy with a $90.00 price target. To see the full list of analyst forecasts on Cognizant stock, see the CTSH Stock Forecast page.

Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Cognizant Reports Strong Q1 2025 Financial Results
Positive
Apr 30, 2025

Cognizant reported strong financial results for the first quarter of 2025, with revenue reaching $5.1 billion, a 7.5% increase year-over-year, and an operating margin of 16.7%. The company also announced a 22% increase in GAAP EPS and a 10% rise in adjusted EPS. Cognizant’s strategic focus on AI-led transformation and operational efficiency has positioned it well in the market, as evidenced by significant client agreements and platform enhancements. The company plans to return $1.7 billion to shareholders in 2025 through buybacks and dividends, while maintaining flexibility for growth investments.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 11, 2025