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Cognizant Technology Solutions Corp A CTSH

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Morningstar’s Analysis

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Cognizant Shows It Is Not Held Ransom by its Past in Q2 Beat; Maintaining $70 FVE

Julie Bhusal Sharma Equity Analyst

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.

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Company Profile

Business Description

Cognizant is a global IT services provider, offering consulting and outsourcing services to some of the world’s largest enterprises spanning the financial services, media and communications, healthcare, natural resources, and consumer products industries. Cognizant employs nearly 300,000 people globally, roughly 70% of whom are in India, although the company’s headquarters are in Teaneck, New Jersey.

500 Frank W. Burr Boulevard, Glenpointe Centre West
Teaneck, NJ, 07666
T +1 201 801-0233
Sector Technology
Industry Information Technology Services
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Classic Growth
Employees 281,200