Cognizant Technology Solutions Corp., a provider of consulting and outsourcing services, rose the most in more than six months after analysts recommended the stock, helping it partially recover from a selloff.
David Koning, an analyst at Milwaukee-based Robert W. Baird & Co., raised his rating to outperform, the equivalent of a buy recommendation, from neutral. He expects the shares to rise to $76 in the next 12 months.
Cognizant advanced 7.1 percent to $60.30 at the close in New York, its biggest one-day increase since Oct. 27. The stock had plunged more than 19 percent yesterday after the company cut its growth forecast, citing a slower than expected start to the year. The company was today’s best performer in the Standard & Poor’s 500 Index.
Yesterday’s selloff was an over-reaction if investors believe the company’s revised growth forecast, Ashwin Shirvaikar, a Citigroup Inc. analyst, said in a client note. Shirvaikar recommended buying the “beaten-down” stock, while reducing estimates for 2012 through 2014 and lowering his 12-month target price to $79 from $88.
Earnings will rise to at least $3.36 a share on sales of $7.34 billion or more this year, Cognizant said yesterday. In February, the Teaneck, New Jersey-based company projected profit of at least $3.43 a share and sales of $7.53 billion.
Cognizant is benefiting from corporations’ shifting tasks such as billing that were once performed in-house to cheaper, global providers. Still, banks and pharmaceutical companies are keeping a lid on discretionary spending for new technology projects, opting instead to maintain existing systems, Gordon Coburn, the company’s president, said yesterday.