UBS Upgrades Cognizant Tech. (CTSH) to Buy; Cites Strong Positioning, Discretionary Project Spending

UBS upgrades Cognizant Technology Solutions (Nasdaq: CTSH) from Neutral to Buy and raises its price target from $50 up to $58.

Analyst Steven Milunovich highlights the following key positives:

1. it is well positioned for the current demand environment;
   
   
2. we expect discretionary project spending to be solid this year; and
   
   
3. a more formal capital return policy could be announced later this year; and (4) the stock could see further multiple expansion.

Mulunovich continued, Cognizant is well positioned for the current IT environment in that IT budgets are under pressure with a focus on cost optimization (Cognizant's "run better"), and savings are being spent on new technologies (its "run different"). Cognizant is one of the few vendors equally credible in both, which it calls dual mandates. Our UBS CIO Survey published today suggests this tepid spending could continue for some time.

For FY14, UBS raises its revenue growth estimate by 1 point to 18.5 percent and EPS by 2 cents to $2.57.

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