Following Cognizant Technology Solutions Corp (NASDAQ:CTSH) CFO’s “bullish” presentation at a rival’s conference Wednesday evening, Wedbush analyst Moshe Katri is out with a positive take on the information technology and consulting firm.
Confident on a better IT spending outlook, the analyst reiterates an Outperform rating on CTSH with a price target of $70, which represents a just under 20% increase from where the shares last closed.
Assessing “‘big-picture’ trends,” specifically, the analyst notes a change in the air for both IT as well as financial services, explaining, “Unlike prior years, enterprise IT buyers seem confident in their spending plans, while specifically pointing to rising optimism in the financial services sector (improving profitability, rising yield curve, improving economic activity).” Additionally, the analyst points to revenue growth guidance of 8 to 10% as well as HC vertical commentary, which has left him with the expectation for improved spending. Katri also points to a guided 22% non-GAAP EBIT margin by 2019 as well as multiple contingency plans on the horizon for clients on the heels of rumored H1B Visa-related legislation.
“We also were specifically encouraged by commentary related to IT spending outlook (spending sentiment, clients’ confidence in the direction of their own business), budget cycle (in-line with Wedbush’s 2017 IT spending survey), and the conservatism embedded in management’s 2017 guidance (not factoring meaningful spending recoveries in Financial Services and Health Care verticals or multiple, large HC deals). We continue to like the stock based on improving sector fundamentals, attractive valuation (roughly $5-$6 in adj. EPS for 2019), combined with a more aggressive capital allocation program. Finally, we believe H1B Visa legislation will likely be better than feared,” Katri contends.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Moshe Katri is ranked #860 out of 4,459 analysts. Katri has an 85% success rate and earns 11.4% in his yearly returns. When recommending CTSH, Katri gains 8.0% in average profits on the stock.
TipRanks analytics indicate CTSH as a Buy. Based on 14 analysts polled by TipRanks in the last 3 months, 9 rate a Buy on CTSH stock, 4 maintain a Hold, while 1 issues a Sell. The 12-month average price target stands at $64.45, marking an 11% upside from where the stock is currently trading.