Analyst Note| Julie Bhusal Sharma |
Cognizant beat CapIQ consensus for revenue and both GAAP and non-GAAP earnings per share, showing relative strength amid the coronavirus pandemic. Moreover, the results indicated less susceptibility to an untimely ransomware attack which brought about business disruptions and fear of lost client accounts at the start of the global pandemic. While Cognizant shied away from giving guidance last quarter, this quarter the company felt confident enough to release an outlook, which paints a slightly rosier revenue for 2020 than we expected. Still, we are maintaining our fair value estimate of $70 per share. Upon the news, the narrow-moat stock climbed 7%, now nearing our fair value estimate. As a result, we advise waiting for a greater discount before investing in the IT services name.