Before the markets opened, Cognizant (NASDAQ:CTSH) reported fourth-quarter results that were above Street expectations. Revenues of $2,742 million (16.4% growth year-over-year) were $131 million above Street expectations (10.9% growth year-over-year), with all geographies and verticals experiencing year-over-year growth during the quarter. Pro forma gross margin of 40.5% was 90 basis points above Street expectations, while adjusted operating margin of 19.4% was within the company’s target range of 19% to 20%. Pro forma EPS of $0.67 were $0.02 above the Street consensus estimate. Management provided its initial fiscal 2015 revenue guidance of at least 19% year-over-year growth despite a 2% foreign-exchange headwind.
There were three main conclusions from the earnings announcement. First, the 2015 revenue guidance of at least 19% year-over-year growth. The guided revenue growth, along with the strong results this quarter, affirms that the client- and project- specific headwinds experienced in 2014 are behind the company and that it is well positioned to capture the market opportunities. In addition, Cognizant continues to see strong demand for its integrated consulting, digital technology, and business process services. Lastly, the integration of TriZetto remains on track, and the company still expects $1.5 billion of revenue synergy opportunities over the next five years.
Shares of Cognizant opened today at $57 and are currently trading up at $57.58. CTSH has a 1-year high of $59.64 and a 1-year low of $41.51. The stock’s 50-day moving average is $53.99 and its 200-day moving average is $49.32.
On the ratings front, Cognizant has been the subject of a number of recent research reports. In a report released yesterday, BMO Capital analyst Keith Bachman reiterated an Outperform rating on CTSH, with a price target of $64, which reflects a potential upside of 11% from last closing price. Separately, on the same day, Goldman Sachs’s James Schneider upgraded the stock from Buy to Conviction Buy with a price target of $68.