CTSH Stock Forecast & Price Target

Cognizant Technology Solutions demonstrated strong financial performance, with Health Sciences revenue increasing by 10.4% year-over-year in constant currency, while overall revenue growth stood at 6.8% year-over-year on a reported basis. The company secured a notable increase in bookings, rising 11% year-over-year and reaching a total of $27.1 billion in trailing twelve-month bookings, indicating robust demand in IT services as evidenced by a book-to-bill ratio of 1.4. Furthermore, the guidance suggests an anticipated operating margin expansion of 20 to 40 basis points, driven by advancements in AI and automation, which positions Cognizant favorably for future profitability and growth.

Cognizant Technology Solutions is facing a negative outlook due to a slight decrease in blended utilization rates and a 1% decline in headcount, reflecting a subdued demand environment for discretionary IT services amidst macroeconomic challenges. The company anticipates slower revenue growth driven by reduced technology spending and difficulties in gaining traction for next-generation services, potentially hindering its ability to meet expectations. Although management reports executing a strategic plan effectively, the initial organic growth outlook for FY25 remains muted compared to its large-cap IT services peers, raising concerns over revenue acceleration and margin stability.