Updated Aug 19 at 4:06pm ET.
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Cognizant has been chosen to help Kyowa Kirin, a Japanese pharmaceutical company, modernize its research and development sites. Working alongside Benchling, a cloud platform for scientists, Cognizant will set up systems to automate lab workflows and use AI to manage research data.
This deal is a good example of Cognizant's push into higher-value AI work. Rather than just maintaining old software, the company is helping large clients in specialized fields like life sciences build new digital foundations. Winning this kind of work in Japan also shows its ability to expand its reach beyond its core Western markets.
Source: PRNewsWire
Morgan Stanley raised its price target from $44 to $51 while keeping a neutral rating. This move shows the firm is recognizing the company's steady execution, even if it isn't yet ready to recommend buying the stock.
While the new target is still below the current stock price, the upward move suggests the firm sees less risk in the business than it did before. It is a small step toward acknowledging that the company's turnaround efforts are starting to show up in the numbers.
Source: Morgan Stanley
Baird raised its price target from $55 to $68. This is a meaningful increase that brings the firm's target closer to our own fair value range.
The move reflects growing confidence that the company can hit its profit goals. When analysts raise targets like this after earnings, it often means they were impressed by how well the company is managing its costs while still winning new business.
Source: Robert W. Baird
Susquehanna lowered its price target from $88 to $82 while keeping its positive rating. This suggests that while the firm still likes the company's direction, it is being more realistic about how much the stock can rise in the near term.
Even with the lower target, the firm still sees significant room for the stock to grow from its current price. This aligns with our view that the business is being priced as if it is in permanent decline, even as it signs larger deals.
Source: Susquehanna
Cognizant brought in $5.5 billion in revenue last quarter, a 4.5 percent increase that matched what analysts expected. The company is seeing real success in its financial services arm, which grew 12 percent, and it has now signed $29.1 billion in new work over the last twelve months. This steady flow of new contracts is a key sign that the company is winning back its place as a top choice for large corporate tech projects.
Profitability is also improving. Operating margins, the percentage of revenue left after paying for the work itself, rose to 16 percent. Because of this efficiency, management raised its full-year profit forecast to as much as $5.82 per share. For long-term owners, this report confirms the business is successfully moving from old-school maintenance work into higher-value AI and digital services while returning cash to shareholders through $1.1 billion in stock buybacks.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Analysts recently adjusted their price targets following the company's second-quarter earnings report. Most analysts are split, with 22 bullish and 29 neutral or bearish, while the average target of $65 suggests a modest 6% upside from today's price.
Management has beaten earnings estimates for seven quarters in a row, usually by about five cents. They have a clear track record of setting targets they can actually hit.
| Expectation | |
|---|---|
| EPS | $1.44 |
| Revenue | $5.65B |
