Cognizant Shares Gain After Company Lifts Profit Forecast
Stock Chart for Cognizant Technology Solutions Corp (CTSH)
Cognizant Technology Solutions Corp. (CTSH), a provider of consulting and outsourcing services, rose the most in almost four years in New York after raising its profit forecast and beating last quarter’s estimates.
Cognizant gained 11 percent to $64.21, the biggest one-day gain since Dec. 5, 2008. Following the increase, the shares are now down less than 1 percent in 2012.
The company forecast profit of at least $3.38 a share this year, according to a statement today. That’s up from a previous forecast of at least $3.36. Teaneck, New Jersey-based Cognizant maintained its full-year sales projection of at least $7.34 billion.
Cognizant is gaining revenue as its clients seek savings by outsourcing tasks to India and other lower-cost nations amid a slowing global economy, Chief Financial Officer Karen McLoughlin said. The company has also been building an emerging- technologies business focused on data analysis and mobile solutions.
“Investments in our consulting practice are really paying off,” McLoughlin said today in an interview. “In this environment, it’s a combination of how do they deliver cost and transform their operating efficiency while thinking about the future.”
Indian rival Infosys Ltd. (INFO) lowered its sales forecast and reported net income that lagged estimates last month, while Tata Consultancy Services Ltd. (TCS), India’s largest software exporter, beat net income estimates.
Cognizant’s reiteration of its revenue guidance for the year is “a relief for some, given mixed earnings reports from other Indian IT services” peers, Jason Kupferberg, an analyst for Jefferies & Co. in New York, said in a research note today.
Second-quarter profit was 82 cents a share, beating the 80- cent average of 23 analyst estimates compiled by Bloomberg.
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