Barclays Maintains an 'Overweight' on Cognizant Technology (CTSH); Expect Strong 3Q and 2H 2011; Market Expectations for 2012 Still Reasonable
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Price: $67.13 -0.61%
Rating Summary:
12 Buy, 25 Hold, 6 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
Rating Summary:
12 Buy, 25 Hold, 6 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
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Barclays maintains an 'Overweight' on Cognizant Technology Solutions (NASDAQ: CTSH) price target of $81.00.
Barclays analyst says, "Read-through from peers' 3Q earnings results continues to support CTSH management's confidence in 2011 demand, in our view. We are modeling 3Q revenue growth of ~7% Q/Q (~31% Y/Y), and expect favorable commentary from management on end market drivers and near-term visibility. With utilization and currency trends also supportive of margin targets, we remain comfortable with our 3Q GAAP EPS of $0.72 (vs. $0.70 guidance), and see upside to the 2011 revenue and earnings outlook."
"At 21x our 2012 EPS estimate, which we tweaked downward to $3.45 (from $3.50) to account for uncertainty around 2012 IT budgets, our updated industry valuation analysis suggests that shares are pricing in 2012 revenue growth below our revised forecast for 23.5%. It's worth noting that CTSH is currently guiding to at least 32% revenue growth in 2011, in-line with actual growth shown in 2008 (our 2011 estimate is slightly higher at 34%). IT consulting names felt the impact of the last recession in calendar 2009, with CTSH revenue growth decelerating to a still-impressive 16%."
For more ratings news on Cognizant Technology Solutions click here and for the rating history of Cognizant Technology Solutions click here.
Shares of Cognizant Technology Solutions closed at $70.13 yesterday.
Barclays analyst says, "Read-through from peers' 3Q earnings results continues to support CTSH management's confidence in 2011 demand, in our view. We are modeling 3Q revenue growth of ~7% Q/Q (~31% Y/Y), and expect favorable commentary from management on end market drivers and near-term visibility. With utilization and currency trends also supportive of margin targets, we remain comfortable with our 3Q GAAP EPS of $0.72 (vs. $0.70 guidance), and see upside to the 2011 revenue and earnings outlook."
"At 21x our 2012 EPS estimate, which we tweaked downward to $3.45 (from $3.50) to account for uncertainty around 2012 IT budgets, our updated industry valuation analysis suggests that shares are pricing in 2012 revenue growth below our revised forecast for 23.5%. It's worth noting that CTSH is currently guiding to at least 32% revenue growth in 2011, in-line with actual growth shown in 2008 (our 2011 estimate is slightly higher at 34%). IT consulting names felt the impact of the last recession in calendar 2009, with CTSH revenue growth decelerating to a still-impressive 16%."
For more ratings news on Cognizant Technology Solutions click here and for the rating history of Cognizant Technology Solutions click here.
Shares of Cognizant Technology Solutions closed at $70.13 yesterday.
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