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Cognizant Technology Solutions Corporation (CTSH), founded in 1988 and headquartered in Teaneck, is an outsourcing and technology giant with a market cap of $34.1 billion. It provides information technology, consulting, and business process services. Cognizant serves various industries and sectors, including financial services, healthcare, media, and communications, enabling its clients to extract value from data and streamline their operations by providing consultancy and outsourcing services.
Companies worth $10 billion or more are generally described as "large-cap stocks," and Cognizant fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the IT services industry. Cognizant ascended to large-cap status due to robust growth in digital services, strategic acquisitions, and its position as a leader in IT consulting, fostering investor confidence and market cap expansion.
Despite its strengths, Cognizant has slipped 14.2% from its 52-week high of $80.09 set on February 23. CTSH stock dipped 4.5% in the past three months, lagging behind the S&P 500 Index’s ($SPX) 4.1% gain during the same time frame.
In the longer term, CTSH stock has tumbled 9.1% on a YTD basis, and despite surging 10.7% over the past 52 weeks, it is trailing behind SPX’s 14.2% returns in 2024 and 25.3% gains over the past 52 weeks.
To confirm the bearish trend, Cognizant has traded below its 200-day moving average since early April and remained mostly below its 50-day moving average.
Cognizant Technology has lagged the broader market due to fierce competition in the IT services landscape. It faced challenges related to workforce management and attrition rates. Additionally, sluggish growth in digital services and internal operational challenges led to the stock’s underperformance.
Despite a momentary dip, the stock rebounded after its Q1 earnings report on May 1, fueled by steady client expenditure. Favorable market conditions and expected interest rate cuts have encouraged clients to boost investments in tech and consulting services, providing a silver lining for Cognizant amid its recent challenges.
Meanwhile, CTSH’s rival Wipro Limited (WIT) has significantly outperformed Cognizant. WIT stock surged 4.9% on a YTD basis and 27.9% over the past 52 weeks.
Wall Street analysts maintain a neutral stance on CTSH's outlook, with a consensus "Hold" rating from the 23 analysts covering the stock. The mean price target of $75.80 suggests a potential upside of 10.4% from the current price levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
