With IT at a Crossroads, Cognizant Is Well-Positioned
As cloud computing and changes in services disrupt the tech world, we think Cognizant is underappreciated by the market.
With IT at a Crossroads, Cognizant Is Well-Positioned
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Andrew Lange: We think the IT services industry stands at a very important juncture as developments surrounding digital services and cloud computing disrupt the status quo. We think these two significant forces have the ability to reshape the IT services landscape over the mid to long term, which is both an opportunity and a threat.
Enterprises are leveraging digital and cloud technologies to reimagine new customer experiences, operational processes, and business models in order to gain or sustain their own competitive advantages. For an IT services vendor, this is reshaping client demand, legacy services, and go-to-market initiatives.
We believe that those vendors that best adapt to the changes associated with digital and cloud trends will outperform peers over the long term and generate better returns for investors. To that point, we think vendors such as Accenture, Capgemini, Cognizant, and IBM are better positioned than others to adjust to these changes. Of the 10 IT services companies under Morningstar's coverage, our top investment idea is Cognizant, as it offers investors a quality, well-positioned vendor that trades at a significant discount to our fair value estimate.