Cognizant Earnings: Expertise in AI Deepens With Record Bookings; Raising FVE

Narrow-moat Cognizant reported second-quarter results in line with our expectations, continuing the strong performance we witnessed in the previous quarter. We are encouraged to see clients’ embrace of Cognizant’s Neuro AI offerings that recorded over 100 active engagements, highlighting the firm’s strong technical knowledge in artificial intelligence. Trailing 12-month bookings also grew 17% year over year to $26.4 billion, the highest level in five quarters. Taking into account the long-term top-line potential as a result of the robust pipeline, we are raising our fair value estimate to $94 per share. Shares increased 8% following the announcement, but still trading significantly undervalued, in our view.