Cognizant Technology Solutions Corp (NASDAQ:CTSH) announced that it has entered into a cooperation agreement with Elliott Management.
Pursuant to the terms of the cooperation agreement, the Cognizant Board of Directors has agreed to continue the ongoing process of refreshing the Board by appointing three new independent directors, two of which will be named prior to the mailing of the Company’s definitive proxy statement for the 2017 Annual Meeting of Stockholders and one of which will be named in connection with the 2018 Annual Meeting of Stockholders. Three existing members of the Board will concurrently not stand for reelection.
Francisco D’Souza, Cognizant’s Chief Executive Officer said, “We are pleased to be working with Elliott and look forward to welcoming new colleagues to the Board. In addition, as part of today’s full-year earnings release, we announced a plan to accelerate our shift to digital, expand margin targets and launch a robust new capital return program. Taken together, these initiatives will make Cognizant even stronger. I am confident that we are well-positioned to drive long-term shareholder value as we continue investing in exciting new areas of growth for Cognizant and our clients around the world.”
Jesse Cohn, Senior Portfolio Manager at Elliott Management added, “Frank and his team have been terrific partners in this process and have developed a thoughtful, balanced and highly attractive plan. In an evolving industry, Cognizant must continue to invest for growth and the digital transition, while further optimizing operations and returning capital to its shareholders. We are large shareholders of Cognizant because we believe the Company has a strong position in the industry and can deliver compelling value to shareholders.”
Cognizant’s Board will also form a Financial Policy Committee, which will assist and advise the Board on issues relating to Cognizant’s operating plan and capital allocation policy. The Financial Policy Committee will be comprised of three directors, including Mr. D’Souza, an incumbent director with previous operational experience and one of the new directors.
Pursuant to the cooperation agreement, Elliott has also agreed to certain customary standstill provisions, as well as to support the integrated plan announced today. The full cooperation agreement with Elliott will be filed in a Current Report on Form 8-K with the Securities and Exchange Commission.
Shares of Cognizant Technology closed yesterday at $53.79, up $1.03 or 1.95%. CTSH has a 1-year high of $63.23 and a 1-year low of $45.44. The stock’s 50-day moving average is $55.84 and its 200-day moving average is $55.01.
On the ratings front, Cognizant has been the subject of a number of recent research reports. In a report released yesterday, Wedbush analyst Moshe Katri reiterated a Buy rating on CTSH. On February 6, Oppenheimer’s Glenn Greene reiterated a Buy rating on the stock and has a price target of $60.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Moshe Katri and Glenn Greene have a yearly average return of 10.5% and 17.5% respectively. Katri has a success rate of 74% and is ranked #911 out of 4381 analysts, while Greene has a success rate of 78% and is ranked #10.
Sentiment on the street is mostly bullish on CTSH stock. Out of 12 analysts who cover the stock, 8 suggest a Buy rating , 3 suggest a Hold and one recommends to Sell the stock. The 12-month average price target assigned to the stock is $64.80, which represents a potential upside of 20% from where the stock is currently trading.
Cognizant Technology Solutions Corp. engages in the provision of information technology, consulting, and business process outsourcing services. It operates through the following segments: Financial Services, Healthcare, Manufacturing, Retail and Logistics, and Other. The Financial Services segment involves in customers providing banking/transaction processing, capital markets, and insurance services. The Healthcare segment offers healthcare providers and payers as well as life sciences customers. The Manufacturing, Retail and Logistics segment comprises of manufacturers, retailers, and customers providing logistics services. The Other segment includes communications, information, media and entertainment, and high technology.