Cognizant (CTSH) stock is in the red on July 30 even after a senior Morgan Stanley analyst raised his price target on the Teaneck-headquartered IT services company.
Investors aren’t cheering CTSH primarily because James Faucette’s upwardly revised price target of $51 still signals potential for significant downside from its previous close.
Cognizant shares have been a major disappointment for investors in 2026, currently down nearly 35% versus the start of this year.
Why Morgan Stanley Raises Price Target on Cognizant Stock
Faucette raised his price target on CTSH shares primarily because of the company’s differentiated artificial intelligence (AI) strategy.
“As inference costs decline, the company is positioning itself for the value shift toward the applied layer (context, governance, workflow redesign and business processes),” he told clients.
Morgan Stanley’s research note arrives only a day after Cognizant reported its fiscal Q2 results, featuring $1.37 in earnings per share (EPS), which represented a 4.58% year-on-year increase, but fell just shy of the $1.38 that analysts had called for.
Crucially, despite the recent selloff, CTSH remains above its key moving averages (MAs), indicating the broader uptrend remains intact.
CTSH Shares Are Attractively Priced in 2026
In its recently concluded quarter, Cognizant signed seven major contracts valued at more than $100 million each.
Plus, operating margin expanded for the sixth consecutive quarter to 16%, giving management the confidence to raise full-year adjusted EPS outlook to a range of $5.70 to $5.82.
Morgan Stanley also recommends sticking with Cognizant shares because the firm has announced a fresh $2 billion buyback plan, which reinforces insider confidence in future upside potential.
Note that CTSH is currently trading at less than 9x forward earnings, which is rather attractive for an AI beneficiary. A healthy 2.43% dividend yield makes up for an additional reason to have it in your investment portfolio.
What’s the Consensus Rating on Cognizant?
Investors should also note that other Wall Street firms are much more bullish on Cognizant than Morgan Stanley.
According to Barchart, the consensus rating on CTSH stock sits at “Moderate Buy” currently, with price targets as high as $88 indicating potential upside of more than 60% over the next 12 months.
