Cognizant (CTSH) Should be Bought Aggressively, Says Deutsche Bank
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Deutsche Bank reiterated a Buy rating on Cognizant Technology Solutions (NASDAQ: CTSH) with a price target of $69. On Friday cognizant announced that Rajeev Mehta was appointed President, replacing Gordon Coburn who resigned from the Company. Analyst Bryan Keane doesn't expect a change to guidance, and said he would be aggressively buying shares at these levels.
"On Friday, CTSH issued an 8-K to announce the resignation of its President Gordon Coburn and revealed an internal investigation on improper payments made in India (likely tied together). While clearly two negative announcements (we spoke with CFO Karen McLoughlin), we don't see any change in CTSH's fundamental position. We believe Gordon’s loss is larger to the investment community than it is internally to CTSH. In addition, there are multiple sales executives assigned to each strategic client and relationships tend to be "sticky,” said Keane. "As for the illicit payments, although this is by no means a positive development, several US multinationals have received similar fines and have run into similar issues conducting business in India."
"We expect CTSH to reiterate guidance when it reports earnings the first week of November and see a trough building with a recovery in 2017. We would be aggressively buying shares at these levels," added the analyst.
Shares of Cognizant Technology Solutions closed at $47.71 yesterday.
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