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Stock Strategist

Cognizant Has Long-Term Potential

2020 will be tough, but margins are set to expand.

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We see an attractive long-term investment opportunity in Cognizant Technology Solutions (CTSH). We think the market has overcompensated for the effects of the coronavirus and the recent Maze ransomware attack on the company at the expense of Cognizant’s long-term potential.

We recognize that 2020 will be a tough year for the company, as we expect IT discretionary spending to suffer and Cognizant to see increased costs to mitigate and further secure its systems after the ransomware attack. However, we think the company is well positioned in the long term to benefit from expanding operating margins, as it still has many structural elements to optimize.

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Julie Bhusal Sharma does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.