CTSH Stock Forecast & Price Target

Cognizant Technology Solutions has demonstrated robust financial growth, with revenue increasing 7.5% year-over-year on a reported basis and 8.2% in constant currency terms, indicating strong demand for its IT services. The company reported a positive outlook for FY25, expecting revenue between $20.5 billion and $21.0 billion, reflecting a growth rate of 3.9% to 6.4% year-over-year, which is an improvement from previous guidance. Additionally, projected earnings per share (EPS) have been revised upward to a range of $4.98 to $5.14, suggesting enhanced profitability and operational efficiency.

Cognizant Technology Solutions is facing significant challenges, as evidenced by a 7% year-over-year decline in 1Q bookings despite a trailing 12-month increase, pointing to a slowdown in client decision-making and discretionary IT spending linked to global macroeconomic uncertainties. Additionally, the company's gross margins are under pressure, showing a decline of 30 basis points year-over-year and 150 basis points quarter-over-quarter, raising concerns about profitability amid rising wage inflation and inappropriate billing rate adjustments. Furthermore, with a cautious outlook for organic growth in FY25 expected to lag behind peers and a subdued demand environment for discretionary IT services, Cognizant's overall growth prospects appear limited.