Cognizant forecast misses estimates as clients cut IT spending

Cognizant had forecast its revenues for the fourth quarter to be at least United States dollars 3.23 billion and USD 12.41 billion for 2015 (higher by at least 21 per cent year-on-year).

Cognizant Technology Solutions sprang a surprise and predicted an indifferent first quarter citing lower spending from key customers, disappointing investors who punished the stock during early-morning trade on Nasdaq. Combined with a surprising negative outlook by the company both fundamental and technical factors are supportive for further depreciation in the share price of Cognizant.

Cognizant Technology Solutions Corp opened for trading at $60.63 and hit $61.02 on the upside on Wednesday, eventually ending the session at $60.76, with a gain of 1.07% or 0.645 points.

GAIL was among the gainers, rising ahead of the company’s December quarter earnings which are expected to be above estimates, traders said.

However, the Nasdaq-listed company, which has a large part of its workforce based in India, disappointed when it gave a revenue guidance of 9.9-14.3 per cent, a sign of caution by the IT service sector in the current global economy. The shares were sold at an average price of $62.22, for a total value of $1,068,192.96.

Nasdaq-listed Cognizant Technology Solutions fell as much as 9.4 per cent after saying it expects the slowest revenue growth in 14 years for the year 2016. The company has a consensus rating of “Buy” and a consensus target price of $71.72. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Wright Investors Service Inc. acquired a new stake in Cognizant Technology Solutions Corp during the fourth quarter worth about $289,000. The disclosure for this sale can be found here. UMB Bank now owns 5,997 shares of the information technology service provider’s stock worth $359,000 after buying an additional 74 shares during the last quarter. On one hand, there are fewer companies with which to do business.

Cognizant primarily serves four domains: Financial Services, Healthcare, Manufacturing, Retail and Logistics and Other (includes Communications, Information, Media & Entertainment and High Technology).