tiprankstipranks
Trending News
More News >
Cognizant Technology Solutions (CTSH)
NASDAQ:CTSH
Advertisement

Cognizant (CTSH) AI Stock Analysis

Compare
2,081 Followers

Top Page

CTSH

Cognizant

(NASDAQ:CTSH)

Rating:74Outperform
Price Target:
$80.00
▲(11.39% Upside)
Cognizant's overall stock score is mainly supported by a strong earnings call outlook and solid financial performance. While valuation is attractive, technical analysis indicates bearish momentum, which moderates the score. Strategic growth through AI and solid financials are key strengths, but market momentum presents short-term risks.
Positive Factors
Bookings Growth
The company experienced strong bookings with an 18% year-over-year increase, securing six large deals with significant total contract value, including two mega-deals.
Guidance and Outlook
Management raised guidance slightly and provided a solid outlook, citing improved business momentum and favorable FX.
Negative Factors
GenAI Impact Uncertainty
Revenue growth remains slow, and there are investor concerns about how long it will take for GenAI to become a significant catalyst.
Revenue Growth Concerns
Organic revenue growth has decelerated to 3%, leading to investor concerns about future growth rates.

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

Cognizant Business Overview & Revenue Model

Company DescriptionCognizant Technology Solutions Corporation (CTSH) is a multinational technology company that provides IT services, including digital, technology, consulting, and operations services. Founded in 1994 and headquartered in Teaneck, New Jersey, Cognizant operates primarily in the information technology services sector. The company serves a wide range of industries, including financial services, healthcare, manufacturing, retail, and telecommunications, offering solutions that help clients improve their business performance through technology.
How the Company Makes MoneyCognizant makes money primarily through its diverse range of IT services and consulting offerings. The company's revenue model is based on providing project-based and managed services, as well as ongoing maintenance and support contracts. Key revenue streams include consulting services, application development and management, digital strategy and solutions, and IT infrastructure services. Additionally, Cognizant generates revenue through long-term contracts with clients, often involving multi-year engagements that ensure a steady income stream. The company has also established significant partnerships with major technology providers, which enhance its service offerings and allow it to deliver integrated solutions to clients. Client retention and the expansion of existing contracts further contribute to Cognizant's earnings.

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 segment is experiencing a strong rebound, with recent quarters showing accelerated growth, aligning with robust earnings call guidance. This growth is driven by significant bookings and large deals, reflecting strategic focus on AI and innovation. Outsourcing Services, however, shows more modest growth, potentially impacted by dynamic demand conditions. Despite challenges in health sciences, Cognizant's strategic initiatives in AI and large deals are expected to sustain momentum, with projected revenue growth of 4% to 6% for 2025, underscoring a positive outlook amidst a challenging environment.
Data provided by:Main Street Data

Cognizant Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook, with strong revenue and bookings growth, significant AI-driven productivity improvements, and strategic advancements in AI capabilities. However, challenges in the Health Sciences segment and the impact of the U.S. Budget Bill on tax expenses were noted as concerns.
Q2-2025 Updates
Positive Updates
Strong Revenue Growth
Second quarter revenue grew 7.2% year-over-year in constant currency to $5.2 billion, marking the fourth consecutive quarter of year-over-year organic growth.
Significant Bookings Increase
Q2 bookings grew 18% year-over-year, translating to trailing 12 months growth of 6%. The company landed 6 large deals with TCV of $100 million or greater, including 2 mega deals valued around $1 billion each.
AI-Driven Productivity Gains
Nearly 30% of the company's code was AI generated in Q2, up from approximately 20% two quarters ago, significantly improving developer productivity.
Adjusted Operating Margin Improvement
Adjusted operating margin improved to 15.6%, up by 40 basis points year-over-year.
Expansion of AI Capabilities
The company has over 2,500 early GenAI client engagements, a significant increase from 1,400 in Q1, and continues to invest in AI research and platform strategies.
Negative Updates
Impact of U.S. Budget Bill
The recent U.S. Budget Bill is expected to result in a onetime noncash tax expense of approximately $400 million in the third quarter, impacting deferred tax assets.
Challenges in Health Sciences
The Health Sciences segment faces uncertainty due to changes in Medicaid and tariffs, potentially affecting near-term discretionary demand.
DSO Increase
Days sales outstanding (DSO) increased to 83 days, up by 2 days sequentially and by 3 days year-over-year.
Company Guidance
During the Cognizant Technology Solutions Second Quarter 2025 Earnings Conference Call, the company reported robust financial performance metrics, highlighting a 7.2% year-over-year revenue growth in constant currency, reaching $5.2 billion. This marked the fourth consecutive quarter of year-over-year organic growth, driven primarily by Financial Services and Health Sciences sectors. Cognizant secured six large deals, including two mega deals each valued at approximately $1 billion, with total contract value (TCV) of large deals more than doubling year-over-year. Adjusted operating margin improved by 40 basis points to 15.6%, and headcount grew by 2% sequentially. Voluntary attrition for tech services fell by 60 basis points to 15.2%. The company emphasized its strategic focus on AI-led opportunities, noting that 30% of its code was AI-generated in Q2, up from 20% two quarters ago. Additionally, the company increased its full-year revenue growth guidance to 4% to 6% in constant currency, reflecting confidence from strong bookings, which grew 18% year-over-year.

Cognizant Financial Statement Overview

Summary
Cognizant demonstrates strong financial performance with steady revenue growth of 3.8%, robust profitability, low leverage, and efficient cash flow management. Despite a slight decline in EBITDA margin, the company's overall financial health remains solid.
Income Statement
85
Very Positive
Cognizant's TTM revenue grew by approximately 3.8% compared to the previous year, indicating steady growth. The company maintains strong profitability, with a gross profit margin of 33.5% and a net profit margin of 11.9% in the TTM. Despite a slight decrease in EBITDA margin to 16.6% from 17.8%, the overall margins reflect healthy operations.
Balance Sheet
80
Positive
Cognizant has a solid financial position with a low debt-to-equity ratio of 0.08 and a high equity ratio of 75.8% as of the latest report. These metrics highlight financial stability and low leverage risk. The return on equity improved slightly to 15.9%, indicating efficient use of shareholders' equity.
Cash Flow
82
Very Positive
The company exhibits robust cash flow health, with a free cash flow growth rate of 24.8% in the latest TTM period. Operating cash flow to net income ratio stands strong at 1.05, demonstrating efficient cash generation relative to net earnings. Free cash flow to net income ratio is 0.94, indicating strong cash profitability.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue20.49B19.74B19.35B19.43B18.51B16.65B
Gross Profit6.87B6.78B6.69B6.98B6.90B5.98B
EBITDA3.81B3.52B3.35B3.60B3.41B2.68B
Net Income2.44B2.24B2.13B2.29B2.14B1.39B
Balance Sheet
Total Assets20.16B19.97B18.48B17.85B17.85B16.92B
Cash, Cash Equivalents and Short-Term Investments1.81B2.24B2.63B2.50B2.72B2.72B
Total Debt1.18B1.50B1.31B1.53B1.64B1.76B
Total Liabilities4.88B5.56B5.26B5.54B5.86B6.09B
Stockholders Equity15.29B14.41B13.23B12.31B11.99B10.84B
Cash Flow
Free Cash Flow2.28B1.83B2.01B2.24B2.22B2.90B
Operating Cash Flow2.56B2.12B2.33B2.57B2.50B3.30B
Investing Cash Flow-1.42B-1.65B-331.00M-106.00M-2.16B-1.24B
Financing Cash Flow-1.56B-915.00M-1.61B-1.94B-1.20B-2.01B

Cognizant Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price71.82
Price Trends
50DMA
73.63
Negative
100DMA
75.34
Negative
200DMA
77.21
Negative
Market Momentum
MACD
-0.29
Negative
RSI
49.29
Neutral
STOCH
52.57
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CTSH, the sentiment is Neutral. The current price of 71.82 is above the 20-day moving average (MA) of 70.87, below the 50-day MA of 73.63, and below the 200-day MA of 77.21, indicating a neutral trend. The MACD of -0.29 indicates Negative momentum. The RSI at 49.29 is Neutral, neither overbought nor oversold. The STOCH value of 52.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$17.93B14.56116.13%5.89%54.53%
75
Outperform
$9.36B23.9711.36%9.73%-0.29%
75
Outperform
$69.03B21.5230.46%3.10%4.52%-0.22%
74
Outperform
$34.90B14.5816.69%1.72%6.34%12.16%
73
Outperform
$29.13B20.8616.50%3.03%-1.95%35.65%
70
Outperform
$159.56B20.3927.27%2.32%6.21%14.87%
61
Neutral
$35.52B8.84-11.04%1.87%8.55%-8.14%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CTSH
Cognizant
71.82
-2.85
-3.82%
ACN
Accenture
254.95
-78.75
-23.60%
EPAM
Epam Systems
169.46
-35.36
-17.26%
IT
Gartner
245.91
-237.77
-49.16%
INFY
Infosys
16.38
-5.68
-25.75%
WIT
Wipro
2.73
-0.29
-9.60%

Cognizant Corporate Events

Business Operations and StrategyFinancial Disclosures
Cognizant Reports Strong Q2 2025 Financial Results
Positive
Jul 30, 2025

Cognizant reported its second quarter 2025 financial results, highlighting an 8.1% year-over-year revenue increase to $5.25 billion, surpassing its guidance range. The company achieved a record $27.8 billion in bookings over the past 12 months, driven by two significant deals exceeding $1 billion each. Cognizant plans to return $2.0 billion to shareholders in 2025, reflecting confidence in its long-term strategy. The company continues to focus on AI and technology solutions, securing new contracts and partnerships to enhance its market position.

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.

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.

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: Aug 01, 2025